FACTBOX - European bank writedowns, credit losses
Monitor
FACTBOX - European bank writedowns, credit losses
by Associated Press - November 27, 2009
Top European banks have lost more than $1 trillion on toxic assets and
from bad loans since the start of 2007, and were expected to top $2.8
trillion from 2007-10 with roughly two thirds from loans and the
remainder on securities, according to International Monetary Fund
forecasts. U.S. banks were expected to take a $1 trillion hit and
European bank losses will reach $1.6 trillion, the IMF said at the end
of September.
It said U.S. banks were about 60 percent through their losses, but
British and eurozone banks were only 40 percent through their
writedowns
Estimates based on writedowns and losses from subprime securities,
mortgages, CDOs, derivatives and SIVs, and losses on bad loans, or non-
performing loans. The definition of a bad loan is complex and can vary
between countries and often includes a provision for future loan
losses.
IMF chief: Half of bank losses could be hidden
Half of the banking industry's losses might not yet be apparent, the
International Monetary Fund's chief was quoted as saying Tuesday.
Dominique Strauss-Kahn told France's Le Figaro newspaper that "there
are still large losses that have not been revealed _ 50 percent are
perhaps still hidden in the balance sheets.
"The proportion is stronger in Europe than in the United States," he
was quoted as saying in excerpts of an interview released before
publication. The history of banking crises shows "there cannot be
strong and healthy growth without a complete cleansing of bank balance
sheets," he said.
Strauss-Kahn was quoted as saying the IMF believes the euro currency
"is undoubtedly a bit strong," though he said finding an
"incontestable" balance on exchange rates is difficult. The euro
touched $1.5001 on Monday, its highest point since Nov. 16.
The IMF chief urged Europeans to "better affirm their economic
strategy if they don't want to allow the Chinese and Americans to
dominate world debate over the next 20 years."