The banks with the biggest balance sheets are set to dominate investment banking in a post crisis world, with smaller rivals, boutiques and local and regional banks lagging behind, an influential report by Morgan Stanley and consultancy firm Oliver Wyman has said.

Faced with increasing capital costs and volatile markets, so-called 'flow monsters', which have big balance sheets and trade across multiple businesses, are better placed to weather a post-crisis environment, marked by tougher regulation and economic woes in Western countries. Banks with deeper pockets to invest millions of pounds in information technology systems will also dwarf smaller competitors as execution and distribution become more important.