Indeed, diversified business models act as better shock absorbers in times of stress, and their ability to perform well under stressed conditions represents an additional incentive to adopting them. In the aftermath of the financial crisis, rating agencies, investors and counterparties have significantly reduced their tolerance to leverage and now discriminate more between firms with different risk profiles.
In this regard, the main priority of EU banks in terms of their business strategies in the postcrisis period is currently to focus on their balance sheet structure (e.g. the composition of lending and of their funding sources), with a view to making it more robust and transparent.