The Future of European Big Complex Banks

Big complex banks must now hold far more capital than in the past because they are seen as posing higher economic risks and they have to be easier to dismantle if they hit trouble. That has hurt their profitability and held back share prices. JPMorgan has faced growing pressure to consider a break-up, and similar questions are being put to less profitable European rivals such as Deutsche Bank, Barclays and Credit Suisse.

We expect JPMorgan to remain continually pressurized by lackluster consumer and corporate activities, soft trading volumes and sluggish mortgage banking in the near term. Though cost containment efforts are noticeable, fundamental pressure from a low interest rate environment and sluggish loan growth will likely be a persistent drag for the top line growth.

It's been a rough day for stocks across Europe. Stocks in Germany and France were down more than 2%, while the market in London declined 1.7%. U.S. markets also opened sharply lower, with the Dow Jones industrial average falling more than 350 points after the opening bell. The selling abated, but shares on Wall Street remain under pressure.