"Prospects for the financial sector overall ... are rather limited," the chief executive of Germany's biggest bank said. "The outlook for the future growth of revenues is limited by both the current situation and structurally."
Ackermann was speaking at Frankfurt's annual Banks in Transition conference against a backdrop of gloom in the capital markets, where fears some eurozone countries could default on their debts have sent investors scurrying for shelter.
Many European banks could go under if they had to accept a "haircut" at current market valuations on their entire sovereign debt holdings instead of the 21 per cent writedown that has been proposed on Greek sovereign debt, Ackermann warned.
"It's stating the obvious that many European banks would not survive having to revalue sovereign debt held on the banking book at market levels," he said.
Shares in the banks that hold much of that debt dropped, with the STOXX Europe 600 banking index falling nearly 5 per cent to its lowest in 29 months.
Fears about how the crisis will play out have halted the takeovers and stock market listings that are the lifeblood of the bloc's investment banks as slowing global economic growth put the prospect of recovery further into the future.
"The chances of a near-term recovery remain slim as eurozone debt concerns, structural reform and a lawsuit for allegedly mis-selling mortgage debt all weigh heavy on the sector," Manoj Ladwa, a senior trader at ETX Capital, said.
Deutsche stock slumped more than 7 per cent, as did shares in Swiss rival Credit Suisse and Societe Generale, while Royal Bank of Scotland fell almost 12 per cent.
A US regulator sued 17 large banks and financial institutions on Friday over losses on about $200bn of subprime bonds, adding to the sector's woes.
The European bank index has lost a third of its value this year and is the worst-performing sector.
Credit Suisse chairman Urs Rohner said the new regulatory environment had curtailed the risky activities for banks, but would also result in lower profits.