Sloppy management and poor decisions can ruin any bank, as Continental Illinois National Bank and Trust Co. of Chicago proved in the 1980s. But experts say banks in general will survive a downturn. Bank investors' portfolios, however, are another matter. Already, investors have turned away from banks or begun shorting their stocks. Bad loans and other problems have led many institutions to fall short of analysts' expectations in recent months shortfalls some see as evidence that banks are being careless and others interpret as a sign that expectations were too high.
Banking is a mature business by and large.
The only way you can get double-digit growth is through acquisitions. And even acquisitions can disappoint. In recent years, earnings growth expectations from major bank deals have fallen apart in the face of cultural conflict, draconian cost cutting and customer alienation. To morph into entities that offer a wealth of financial services but bear little resemblance to traditional banks, experts say. They already have taken steps in that direction.