Global Journal of Management and Business Research, D: Accounting and Auditing, Volume 22 Issue 2

Jul 10–Jun 11 235 –487 362 –851 Jul–Dec 11 –62 294 92 665 Jan–Jun 12 27 -276 86 252 Source: ECB, 2012 Central banks became the lender of last resort for commercial banks. The Eurosystem, an institution comprised of the national central banks of Eurozone members, played a key role in the banking system crisis. Central banks from countries with surplus deposited their funds in the Eurosystem, and central banks from countries with deficit borrowed from the Eurosystem, to provide their commercial banks with funds (Allen and Moessner, 2012, pp. 1-26). As shown in Figure, from 2009 the PIIGS’ commercial banks significantly increased their borrowings from the Eurosystem. Source: Datastream; national data Figure 11: Commercial Banks Loans through the Eurosystem The weaker economic environment in Europe also impacted on investment banks. As the sovereign- debt crisis weighed on stock markets and investors lost confidence, initial public offerings, trading and merger and acquisitions activities were severely affected. Europe was hit hard by the slowdown in financial markets, with investment banking fees in the region so far falling to the lowest level in ten years in 2012, according to Thomas Reuters (Sakoui, 2012). Source: Dealogic Figure 12: US vs. EMEA Global Share of Investment Banking Fees (%) In addition, fixed-income revenue for the 10 largest global investment banks, which include European banks Barclays, Deutsche Bank, Credit Suisse and UBS, dropped at least 25 % between 2009 and 2012 (Ewing, 2012). This downturn in the investment banking industry resulted in more than 120,000 job cuts between 2011 and 2012 (Ewing, 2012). Banks scaled down their investment banking division to Lessons Learned from European Sovereign Debt Crisis 61 Global Journal of Management and Business Research Volume XXII Issue II Version I Year 2022 ( )D © 2022 Global Journals