European banks are bracing for a difficult 2009 as a rising tide of corporate bankruptcies adds to their problems with bad mortgage and credit-card loans.

With the UK on the brink of recession and the euro zone heading for what could be its sharpest downturn since World War II, analysts are predicting billions of euros in writedowns for banks as more companies run into trouble and renege on their debts. The losses could present a challenge to European governments, which in the past few months have spent more than €70bn ($97.79bn) on capital injections to keep their banking sectors afloat.