Investment banks are used to a little bit of stormy weather. The problem is that, after a few sunny spells in the first quarter of this year, many banks are dressed for the occasional shower over the coming year rather than the torrential and unremitting downpour that now seems more likely.

A combination of economic uncertainty, market volatility and tougher regulation has conspired over the past year to create a harsh climate for investment banks. Across a sample of a dozen large banks, underlying revenues over the four quarters to the end of March have fallen by just over 15% compared with a year earlier, while pre-tax profits have halved, according to my analysis. Pre-tax return on equity across the industry is running at just 9.6% over the past four quarters, or little more than half banks' cost of capital.