Popular Tags


IMF predicted one third of European and quarter of US banks to perish

A substantial number of the largest banks is too weakened, and their problems will not solve any increase in global growth or higher interest rates.

"Financial stability now depends on how well financial institutions are adapting to this new era" with tougher regulation and supervision, restrained growth and low interest rates, the report said. "Fundamental changes both in the business model of banks and in the structure of the system to ensure a viable and healthy banking system are necessary," the IMF experts say.

In general, bank assets and capital structure indicators are now better than before the financial crisis, but low profitability remains a significant problem, which cannot be solved with the help of the cyclical economic recovery. In particular, the IMF drew attention to euro-zone banks, earnings of which are now half as much as the average levels in 2004-2006, while Europe lags behind the US in terms of the disposal of bad loans.

Thus, the IMF takes the same position as the European Central Bank (ECB), leaders of which (as distinct from banks themselves) do not consider the extremely loose monetary policy the main cause of banking problems. In addition to Europe, the financial stability of Japan and China causes the major concerns of the IMF experts in the medium term.

However, the IMF notes the weakening of short-term financial risks compared to the previous (April) assessment, in particular, the reduction of pressure on the emerging markets in the context of increased raw material prices and a stabilization of the Chinese economy.


  • October 10, 2016 10:10 PM MSK