Pressures on European banks to deleverage increased towards the end of 2011 as funding strains intensified and regulators imposed new capitalisation targets. Many of these banks shed assets, both through sales and by cutting lending. However, this did not appear to weigh heavily on asset prices, nor did overall financing fall for most types of credit. This was because other banks, asset managers and bond market investors took over the business of European banks. An open question is whether other financial institutions will be able to substitute for European banks as the latter continue to deleverage. The reduction.
