IMF warns on bank losses


In April the IMF estimated in its Global Financial Stability Report that global bank losses could reach $4 trillion but it said it cut this figure by $600 billion to reflect rising securities values and new ways of calculating losses.

“This improvement is welcome but there are still significant challenges ahead, particularly for banks,” said Jose Vinals, head of IMF’s Monetary & Capital Markets division.
In an interview with Reuters, Vinals said global financial conditions had improved significantly although there are lingering concerns over bank capital. “The challenge is how do we make this financial system that we have now support the recovery going forward?”
The report said that while banks have enough capital to survive, their earnings are not expected to fully offset write-downs expected over the next 18 months.

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