Profits at Britain's banks may be under pressure for the next decade because provisions against bad debts are dangerously low compared with before the crisis, according to a report from accountants PricewaterhouseCoopers (PwC).

Problem loans trebled from €50bn (£44bn) to €160bn between December 2007 and June 2010 but total provisioning as a proportion of those loans fell from 65pc to 46pc over the same period, PwC found.

The data demonstrates that UK banks are more exposed to losses from their "non-performing loans" (NPLs) than previously as they may have not set sufficient funds aside.

"European banking profitability may remain under pressure even after NPLs have peaked, expected to be 2010-2011 for most markets, [as] the current level of provisioning has not increased at the same rate as the growth in NPLs," said the report on the banking system across Europe.

PwC added that Europe's banks need to sell or run-off a "massive" €1.3 trillion of non-core assets, which "will take 10 years". "Dealing with this massive issue will require a significant volume of transactions. To put the scale of this task into context, the average annual European banking M&A market between 2003 and 2010 totalled just €70bn," the report noted.

Richard Thompson, a PwC partner, said: "We expect the rate of growth of NPLs to reduce over the next few years as the economic recovery gains momentum. However, the impact of rising interest rates and austerity measures in many countries adds a layer of uncertainty over the ability of companies and consumers to meet their......Click HERE to read more on this story