BNP Paribas saw its earnings fall significantly in the second quarter, driven by a downturn in its corporate and investment banking division.

France's largest bank by revenue said its net income dropped 13.2% in the three months from April to June to €1.8 billion.

Its revenues slumped 8% to €10.1 billion as corporate and investment banking clients pulled back business in light of the uncertainty of Europe's crisis and the global slowdown.

Revenue at the corporate and investment banking arm fell 23.6%.

"Against a general background of crisis in the capital markets and strong volatility, there was less demand from clients," the company said.

Europe's banks have been particularly squeezed by the euro debt crisis. They often hold large amounts of government bonds, whose value has plummeted as countries have either gone bankrupt or teetered on the brink.

In addition, just as their balance sheets were taking a hit, banks were asked by European regulators to increase the quality of the assets they hold, so they can better weather any storms ahead.

As they tucked away more money in those rainy-day funds, banks sometimes struggled to come up with enough cash to fund their day-to-day operations. In particular, as US investors grew wary of Europe's crisis, the banks often found it hard to get dollar funding.

But BNP Paribas said it had shored up its liquidity situation - as the cash kept on hand for short-term financing is called. It now has €200 billion in immediately available reserves, which the bank said satisfies nearly 100% of its short-term wholesale funding needs.

The bank also noted that it had nearly achieved the 9% ratio of good assets to risky ones that new international banking regulations will require by the end of the year.