The onslaught on European banks is unremitting. But who is eating their lunch? In the latest setback for banks in Europe, Moody’s Investors Service has put the subordinated debt of nearly 90 of them under review for a possible downgrade. No surprises there: European sovereigns have limited appetite or ability to support them, let alone bondholders. But the warning highlights the risk of a European credit crunch as banks shrink risk-weighted assets to meet new capital rules and as they struggle to fund those assets.

Eurozone lenders face a double balance-sheet whammy. On the liability side, banks outside the bloc and corporate counterparties are scrutinising risk concentrations by sovereigns and banks as never before. Take Nomura: it has cut Italian assets by 80 per cent and Spanish assets by 60 per cent since the third quarter. Where creditors have not already cut lines to eurozone banks, they insist on collateral. That is only prudent. After all, in the second quarter, European banks were cold-shouldered in the US money markets. Their wholesale funding costs have soared by comparison with their Swiss, US and some UK counterparts. The squeeze has spread to retail banks: Greek bank Alpha lost 5 per cent of its deposits in the third quarter.

On the asset side, French banks BNP Paribas, Crédit Agricole and Société Générale have lost terrain to US banks in the European syndicated loan market. The French trio’s near 15 per cent share is the lowest since Lehman Brothers fell, Bloomberg data show. The share of the top five US banks, including Citigroup and JPMorgan Chase, rose by 3 percentage points to 13 per cent. Japanese banks and the likes of HSBC and Standard Chartered could gain as French banks retreat in Asia.