UK banks are borrowing billions of pounds each month and may be forced to seek yet more support from the state, an economic think-tank warns.
The New Economics Foundation (NEF) says that by next year banks will face a £25bn funding gap after analysing Bank of England (BoE) data.
According to its report, Where did our money go?, an estimated £1.2trn of state cash has already been pumped into the banking system.
In late 2008, RBS and Lloyds had to be part-nationalised as they ran up huge losses during the credit crisis, while others including HSBC also benefited from cheap credit provided by the central bank.
The NEF says there has been a "shocking" lack of information on how the money has been used.
It adds new lending to households and firms has stagnated and that interest rates for borrowers is higher than it was before the economic crisis.
Tony Greenham, head of the finance and business programme at the NEF, says: "We are on the cusp of a second banking failure.
"The public have already paid for the failure of the banks twice, first by bailing them out and then by suffering a programme of drastic cuts to public services to appease the financial markets."
The NEF calls for urgent reform of the sector, including splitting retail operations from ‘more risky' investment banking and breaking up "too-big-to-fail" institutions, is required immediately.
It says the results of current inquiries - such as the Independent Commission on Banking (ICB), which began its work last Friday - will come too late.
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