The strong rebound of bank shares since last summer may have seduced investors into thinking that many of the problems of the past have been resolved. But there is renewed and shifting regulatory focus that could ultimately lead to a greater crackdown and a break-up of the banks.

Regulators are now questioning the complex models that allow banks a high degree of flexibility when valuing assets. This latest regulatory action - sharpening prudence and applying large amounts of common sense - is likely to lead to the need for more capital by UK and European banks, most likely to be raised through equity issues and disposals.