IMF forecast for low losses at $ 3.4 BLNS banking

The International Monetary Fund said Wednesday it has lowered its estimate for global bank losses to 3.4 billion from $ 4 billion estimated in April, but warned that credit losses could rise if unemployment increases.
This reduction of $ 600,000 million reflects a revaluation of securities and the new methodology for calculating depreciation.
"The improvement is welcome but there are still significant challenges, particularly for banks," said Jose Viñals, head of the division of capital and money markets by the IMF.
In the latest report on global financial stability, it said that it "has improved, but risks remain high, with a significant risk of suffering a setback."
As for the different geographical areas, the IMF said that U.S. financial institutions have made nearly 60 percent of the necessary write-offs, while the euro zone and UK in 2010 would have recognized only 40 percent of losses.
The report said that although banks have enough capital to survive, their earnings do not exceed the expected depreciation in the next 18 months.

Viñals said banks had begun to make money after heavy losses in the toughest part of the financial crisis, but urged financial institutions to retain their profits and not pay dividends.

"There is a temptation to take profits when you return to pay for share buybacks and dividends," he told a news conference in Estamubl before the start of the semiannual meetings of the World Bank and IMF."Preserving capital is very important at this stage," he said.
He added that although the balance sheets of banks have been stabilized with the help of governments, lacked sufficient capital to meet credit demands at the beginning of economic recovery.

It will take stronger measures to strengthen bank capital and the ability to generate profits to ensure that banks contribute to the recovery process.
The fund said that while the growth of private sector credit has shrunk in the major economies, the overall requirements of nonperforming loans has slowed down so quickly by the fattening of deficits.According to the IMF, insolvencies in credits could be the cause of two to three thirds of depreciation between 2007 and 2010, with the property sector as a major cause of those in the U.S. and abroad credits in the case of the eurozone and the UK.

The IMF urged the authorities to address the problem of bad assets that are still on the books of banks.
The report also added that one of the risks to the banking world is not yet seen the end of a weakening in the business assets of the estate."The property sector shifted to the later than others, but its decline is now in full swing," he said.
Outside the U.S., a market where more risk for the bank would this is why Europe is Spain.

"The European property markets are also under pressure, especially in Spain, Ireland and the UK, where prices have shown some significant declines.
However, according to IMF Restructuring Fund Banking Ordinance (frob) could "contain systemic risks" in Spanish banking in case of fall of any size.

"The Frob can also trigger the merger between the boxes, in fact, some mergers are under way," he added.
Since the creation of Frob in June, alliances have emerged among the boxes of Sabadell in Catalonia, Girona, Terrassa and Manlleu, and between the Andalusian Unicaja, Caja Jaen and CajaSur.