Greece's debt problems drove a slew of heavy losses across the European banking sector on Thursday, and bosses warned the euro zone crisis would continue to threaten earnings.
From France to Germany, Britain to Belgium, some of the region's biggest banks lined up to reveal billions of euros lost through writedowns on Greek loans.
"We are in the worst economic crisis since 1929," Crédit Agricole chief executive officer Jean-Paul Chifflet said.
Crédit Agricole reported a record quarterly net loss of €3.07-billion ($4.06-billion U.S.), performing worse than expected from the cost of shrinking its balance sheet and after a €220-million charge on its Greek debt.
"We think 2012 is going to still be a tense period," Mr. Chifflet said, adding: "We're hoping that our results will be largely better than in 2011."
Europe's banks have already written down billions of euros from losses on Greek government bonds and loans, and a deal agreed this week with its creditors will inflict losses of 74 per cent on bondholders.
"We can't say that the writedowns are over," said Franklin Pichard, director at Barclays France. "Even if some can say that the worst is over, we are only at a new stage in terms of provisioning and not necessarily at the end."
That is because, despite the bond swap deal, bondholders could suffer further hits if Greece's economy fails to recover.
Britain's Royal Bank of Scotland has marked its Greek bonds at a 79-per-cent loss -- or £1.1-billion ($1.7-billion U.S.) -- for 2011. The state-owned bank posted a fourth quarter loss of nearly £2-billion on Thursday.
Problems in Europe's banking sector are far wider than Greece, however.
"We have reduced the balance sheet of RBS by over £700-billion of assets. That is roughly twice the size of the entire national debt of Greece," said RBS boss Stephen Hester.
The region's banks are still repairing the damage of the financial crisis and shrinking their assets. They must also find €115-billion by the middle of this year to shore up their balance sheets against future shocks. But any weakening in the economy will hit earnings and make that harder to achieve.
Germany's Commerzbank, whose fourth-quarter earnings were spoiled by a €700-million hit on Greek sovereign debt, needs to find €5.3-billion euros to meet the stringent new capital requirements set by Europe's banking regulator. It has now lost more than €2-billion on its Greek bonds.
Commerzbank said it could reduce some of its shortfall by shedding risky assets, though the debt crisis still had the potential to disrupt earnings.
"The high degree of uncertainty associated with the European sovereign debt crisis will ... continue to pose challenges for us," CEO Martin Blessing said.
European governments are hoping to avoid more state bailouts to prop up the banking sector, and to limit the fallout should any bank collapse.
Bailed out Franco-Belgian bank Dexia warned on Thursday it risked going out of business. It suffered a 2011 net loss of €11.6-billion, hit by its break-up and exposure to Greek debt and other toxic assets such as U.S. mortgage-backed securities.
Dexia, which accepted a state-led break-up and the nationalization of its Belgian banking arm in October and is now little more than a holding of bonds in run off, booked a €3.4-billion loss on its holding of Greek sovereign bonds.
French investment bank Natixis, rescued from near-collapse during the 2008 financial crisis by a government-backed merger of its retail co-operative parents, reported a milder-than-expected 32-per-cent decline in quarterly profit.
Despite the weak results, banks still found room for bonuses.
RBS, 82 per cent owned by the British government, paid out almost £1-billion in bonuses to staff in 2011. Crédit Agricole said it would cut trader bonuses by 20 per cent.