The pain from the subprime crisis has largely worked its way through the investment banking world but might only be just beginning for retail lenders, John Thain, chief executive of Merrill Lynch, said on Wednesday.

Speaking in Mumbai, he said the credit crunch had taken its toll on consumers and, coupled with rising energy prices and unemployment, was expected to result in higher defaults on retail loans, contributing to weakness in the US economy for at least six to 12 months.