Global investment banks risk seeing their annual earnings wiped out by the coronavirus crisis, with European banks more vulnerable than their more profitable US counterparts.
Even the most optimistic “rapid rebound” scenario, where relative normality is restored in six months or less, could lead to a 100 per cent decline in profits this year, according to a new report co-authored by Oliver Wyman and Morgan Stanley.
In a more pessimistic model — dubbed “deep global recession” and lasting a year or more — some weaker banks would slump to big losses. In this scenario, credit losses could surge to between $200bn and $300bn, compared with $30bn to $50bn if a rapid rebound unfolds.
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