Big banks in Europe are riskier than anywhere else in the world.
They have higher non-performing loans, greater asset shrinkage, larger losses and higher debt-to-equity ratios. And European banks are bracing for even worse loan losses.
It’s the combination of those characteristics that lead to a crisis, and the eurozone essentially is in one today.
Non-performing loans over total loans
There are 200 banks in the world with market values of more than $5 billion, 48 of which are in Europe. The chart below plots non-performing loans over total loans on the y-axis and market capitalization (or value) on the x-axis for that population of banks.
