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As fortunes dim, banks confront a leaner future

Battered by a weak economy, the nation’s biggest banks are cutting jobs, consolidating businesses and scrambling for new sources of income in anticipation of a fundamentally altered financial landscape requiring leaner operations.

Bank executives and analysts had expected a temporary drop in profits in the aftermath of the 2008 financial crisis. But a deeper jolt did not materialize as trillions of dollars in federal aid helped prop up the banks and revive the industry.

Now, however, as government lifelines fade and a second recession seems increasingly possible, banks are finding growth constrained. They are bracing for a slowdown in lending and trading, with higher fees for consumers as well as lower investment returns amid tighter regulations. Profits and revenues are slipping to the levels of 2004 and 2005, before the housing bubble.

“People heard all these things before, but the reality of seeing the numbers is finally sinking in,” said John Chrin, a former JPMorgan Chase investment banker and executive in residence at Lehigh University’s business school. “It’s hard to imagine big institutions achieving their precrisis profitability levels, and even the community and regional banks are faced with the same problems.”

—Eric Dash, The New York Times

Trial shows blockbuster potential for blood clot pill

An experimental pill to prevent blood clots exceeded already high expectations as a better therapy for millions of people with atrial fibrillation, according to final results of a worldwide study released Sunday.

The study was featured at the European Society of Cardiology in Paris and simultaneously published on the website of The New England Journal of Medicine.

“It’s a remarkable achievement,” said Dr. Valentin Fuster, a past president of American and world heart associations, who was not involved with the trial. “This is one of the most significant advances in cardiovascular medicine in the last five years, no question.”

The twice-daily pill, to be called Eliquis, prevented 21 percent more strokes than the blood thinner warfarin, a standard treatment for heart arrhythmia, and resulted in 31 percent fewer incidents of major bleeding over an average of 1.8 years in the study.

—Duff Wilson, The New York Times

Europe’s growth may be weaker than expected

BRUSSELS — Jean-Claude Trichet, the president of the European Central Bank, acknowledged Monday that eurozone growth could be weaker than expected, suggesting that the central bank might be more reluctant to raise interest rates again.

But Trichet told a special session of the European Parliament, called to discuss the debt crisis in Europe, that inflation could remain above the bank’s target level of 2 percent “over the months ahead” and predicted that growth would continue at a “modest pace.”

The central bank plans to release a new forecast in early September.

Meanwhile, Olli Rehn, the European commissioner for economic and monetary affairs, emphasized the dangers posed by continuing bouts of volatility, saying that “financial markets and the real economy move now more in synchrony.” That made Rehn “seriously concerned about continued financial turbulence spilling over to and potentially harming the recovery of the real economy.”

—James Kanter, The New York Times