The bank predicted a 300-point drop in the Standard and Poor's 500 index by September, the Telegraph reported Wednesday. That represents about a 21-percent drop from the current S&P 500 level.

The bank's credit strategist Bob Janjuah said, "a very nasty period is soon to be upon us."

"I do not think I can be much blunter," Janjuah said. "If you have to be in credit, focus on quality, short durations, non-cyclical defensive names."

"Cash is the key safe haven," he said.

Kit Jukes, head of the bank's debt markets, said "economic weakness is spreading and the latest data on consumer demand and confidence are dire."

Jukes said "the political fall-out" in Europe "could be substantial as finance ministers from the weaker economies rail at the ECB."