Banks across Europe are once again taking a long, hard look at their funding costs after proposed changes to the structure of their debt sent a wake-up call to institutions that had been in “denial”, according to one banker.

The first week of the year was a blockbuster for issuance, which is just as well considering the amount that banks have to raise this year. But funding costs are rising and the options available to banks are narrowing as regulators and rating agencies look at changing how banks are assessed. The point may be approaching where some banks will have to look at their business models to relieve the pressure.