Nomura’s quarterly results will have done nothing to stem the growing tide of pessimism around the investment banking sector and shows that its recruitment of star talent from rival firms has done little to mitigate against overriding tough market conditions.

The Japanese bank, which has been expanding rapidly in Europe and the US over the last year, posted a 48.7% year-on-year decline in revenues within its wholesale division to 108.6bn ($1.25bn), as trading activity and underwriting fees slumped.

Overall, quarterly profit fell by 80% for the three months to June 2010 compared to the same period last year.

But, over the course of this period, Nomura has been busily expanding its European business, particularly within FICC where it was rumoured to have paid some generous guarantees to get key talent onboard.

Even this week, Guy Cornelius joined as co-head of fixed income sales for Emea, along with Raffaele Ricci who transferred internally from his role as head of solutions sales and co-head of sales for southern Europe and the Middle East.

Overall in Europe, however, headcount has increased by a not-particularly spectacular 130 (to 4,499) since March, which may be reflective of the alleged difficulty Nomura has experienced hanging on to ex-Lehman alumni now that the two-year guarantees have expired.

The bank also points to aggressive hiring in its US wholesale banking function – which includes trading and investment banking activities. Headcount now stands at 1,455, which is more than double the 726 employees this time last year.

“The near-term profit outlook remains uncertain; over the mid-to-longer-term, we’ll be looking for an expanded product line in Europe and Asia ex-Japan, and for its expansion efforts in the U.S. to translate into reasonable profit,” said Jun Oshi, an analyst at Keefe, Bruyette & Woods.

In June, Glenn Schiffman, Nomura’s head of Americas investment banking, said it planned to add a further 35 investment bankers this year, having already recruited 50.

In the last couple of weeks, it’s hired Harry Curtis from Lazard as an analyst covering the US gaming, hotel and leisure industries and Steven Seltzer as co-head of leveraged finance.

It’s hired eight analysts within financials, retail and consumer, as well as senior investment bankers and Nomura says “talented hires are joining from competitors”.

Overall compensation expenses are now 122bn ($1.4bn), which is a 12% slide on the 138bn ($1.6bn) put aside this time last year.