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The internal transfer process varies bank to bank, but transferring internally will be easier than recruiting at a new firm. Only downside is that you most likely will not be granted an immediate transfer request (will probably take 1-2 years before you can transfer). If timings important, recruit elsewhere, or else just stick it out for now and get in touch with HR to discuss the transfer policies within your firm. 

I'd argue in this environment (at least over last 2 years), lateralling to a new bank is a lot easier than dealing with internal politics around a transfer - but you definitely will have both options available. If its the same P&L and the same group head (e.g JPM's M&A team - then its significantly easier to move between say NY and SF). You can also try to recruit for an offer elsewhere and let your firm know that you want to make the move, and you have a competing offer - they will, more likely than not and subject to business needs, accommodate you.