If you thought the worst was over for the investment banking industry, then brace yourselves. As European banks stumble into 2012 they are facing a monumental challenge to meet demanding new targets for reducing the leverage that had fuelled their outsize returns of the decade before the financial crisis. It won’t be pretty.

As if Basel III weren't enough of a headache, big European banks face a deadline of June 30 from the European Banking Authority to increase their core Tier-1 capital ratios to 9%, equivalent to raising €115bn in equity.