Investment banks have sufficiently solid risk management, profitability and liquidity to work through temporary dislocation and an extended severe downturn in profits is unlikely, according to rating agency Standard & Poor's.

S&P said in a report: "Our banks and broker-dealer ratings expect that inflection points such as the third quarter of 2007 will be testing, but manageable for most leading players. It may be some time before record earnings levels are regained, but we do not at this stage believe that an extended severe downturn is probable."