The wide-ranging analysis, conduced by the Centre for the Study of Financial Innovation (CSFI) and PwC, reveals today that many people within the industry predict further bank failures and nationalisations.
Macro-economic risk has leapt to the top of the unenvied list, as the major banana skin threatening the banks – up from fourth place in 2010.
The danger of a fresh credit crunch dominates the table, with “credit risk”, “liquidity” and “capital availability” the most worrying eventualities, following concerns about the wider economy.
“The picture painted by this survey is very bleak,” said David Lascelles, the survey’s editor. “It shows a fragile banking system beset by major threats and uncertainties.”
The ongoing Eurozone crisis is mostly feared as the trigger for a wider economic slump and credit crunch, the survey of more than 700 bankers, banking regulators and close observers showed.
“The shock of a euro collapse would hit banks not just in Europe but in all major regions of the world,” the report explained. “Bankers in countries as wide apart as the US, Canada, China, Argentina and Australia put the euro crisis at the top of their list of concerns.”
Economic worries pushed “political interference” down the list of threats to the banking industry, yet this – along with regulation – still complete the top six.
“Although regulatory initiatives are intended to bring about a solution to the banking crisis,” the report said, “they are also adding cost and distraction to banks, and making it harder for them to supply credit to the economy.”
For the first time, respondents in emerging markets were more positive about prospects than those in Europe and North America.