'$300bn more in losses to come from subprime crisis'

Oliver Wyman warns that there are up to another $300 billion (£153billion) of losses to come from the subprime fall out on top of the $100 billion reported already.

It says the credit crunch resulted in the worldwide financial services industry losing market value in 2007 for the first time in five years. In total, investors in the industry lost more than $1 trillion last year and Wyman says that earnings and valuations will come under further pressure this year. But it adds that firms which adapt and survive will emerge "fitter and stronger".

It also identifies four new areas likely to provide major potential risks for financial services companies. These are:

Corrections in the European property market, with the UK and Spain the most exposed countries.

A major drop in Asian markets, especially China and India.

Further imbalances in global commodity prices following 2007's surge in oil, gold, coal and agricultural products.

A further decline in the US dollar, sparking devaluations in investors' holdings and new intervention by central banks that may slow economic growth.

Scott McDonald, head of Oliver Wyman Financial Services, said: "Recent events have exposed failings in certain areas of risk and liquidity management, as well as other excesses that require correction.

"To thrive in the current challenging environment, chief executives will need a much tighter grasp of potential exposures and contingency plans for worsening markets."