IMF announces global bank losses stand at $4 trillion
The International Monetary Fund (IMF) has announced that the estimate of the losses across the world inflicted by banks as a result of the credit crunch is going to hit $4 trillion.
This confirms the estimates that were first published in The Times, which is far larger than the initial forecast of less than $1 trillion a year ago.
It has been a common theme that governments, agencies and even banks themselves have continually underestimated the losses, however the mounting write-offs have continued to spiral in the global recession.
The report also highlighted a further problem for the UK banking industry with the government needing to pump a further £170bn into the banking system with the possibility of having to nationalise more banks before the end of the crisis quite likely.
These warnings are timely as there is renewed hope that the worst of the financial crisis has passed.
Thus far, American banks have written off $510bn with roughly the same amount again to be written off over the next two years.
In the UK the figures are more accurate with $110bn in bad debts having been written down by British banks, with another $200bn over the next two years.
As a result the IMF has called for a thorough cleansing of banks’ balance sheets and a restructuring.