There are also worries that banks are storing up the cheap loans provided by the ECB rather than using them to stimulate the wider economy.

European banks started off the first-quarter earnings season on a downbeat note this week, with Deutsche Bank and Barclays both hit by one-off charges.

“There’s been enough money put into the system, it’s just going straight back to the central banks,” Gandy said.

“The liquidity in the inter-bank markets has gone. Deleveraging has already occurred in the inter-bank market and the ECB has effectively replaced it.”

Many believe the euro zone entered the second phase of a double-dip recession last year, and is expected to suffer from slow growth for several years – while many of its economies are undergoing austerity programs which could stifle growth.

“There’s so much uncertainty about economic growth and what to invest in, people who have got money are holding on to it, and those who haven’t, haven’t got anyone who’s lending to them,” Gandy said.

“German and Nordic banks are awash with liquidity but can’t actually find anyone to lend out to.”

There is also the possibility that Moody’s review of European banks’ ratings, due in early May, could result in some downgrades.

More Top Stories

Tax Evasion Dangerous for Europe: Schulz

Shale Gas Could Be UK's 'New North Sea'

Europe Needs Big Reforms: Bank of Canada's Carney

The Thin Lady Sings: Spanish Opera Protests Austerity

EU Bank Bonuses to Affect a Lot More Bankers

More Europe News