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IMF Says European Banks May Have to Sell $3.8 Trillion in Assets DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

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IMF Says European Banks May Have to Sell $3.8 Trillion in Assets Empty IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

Post by KAI Wed Apr 18, 2012 2:17 pm

IMF Says European Banks May Have to Sell $3.8 Trillion in Assets


By Sandrine Rastello - Apr 18, 2012 6:00 AM PT - Bloomberg

European banks could be forced to sell as much as $3.8 trillion in assets through 2013 and curb lending if governments fall short of their pledges to stem the sovereign debt crisis or face a shock their firewall can’t contain, the International Monetary Fund said.

In a study of 58 banks including BNP Paribas SA (BNP) andDeutsche Bank AG (DBK), the IMF forecast that under such circumstances, gross domestic product in the 17-country euro region would be 1.4 percent lower than now expected after two years. Even under its baseline scenario, the IMF sees banks’combined balance sheets possibly shrinking by as much as $2.6 trillion.





Enlarge imageIMF Says European Banks May Have to Sell $3.8 Trillion in Assets IorAGZ7C6SqE

IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

IMF Says European Banks May Have to Sell $3.8 Trillion in Assets I0emlfJxiWZU


Josep Lago/AFP/Getty Images

Workers repare a broken window of a Deutsche Bank office in Barcelona on March 30, 2012, a day after a general strike was held in Spain.

Workers repare a broken window of a Deutsche Bank office in Barcelona on March 30, 2012, a day after a general strike was held in Spain. Photographer: Josep Lago/AFP/Getty Images


IMF Says European Banks May Have to Sell $3.8 Trillion in Assets I.VLJUgnTE4k

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April 18 (Bloomberg) -- Jose Vinals, director of the International Monetary Fund's monetary and capital markets department, talks about the IMF's Global Financial Stability Report and Europe's debt crisis. Vinals speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)


IMF Says European Banks May Have to Sell $3.8 Trillion in Assets IURxucdkZbZk

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April 18 (Bloomberg) -- Bloomberg's Sara Eisen reports that European banks could be forced to sell as much as $3.8 trillion in assets through 2013 and curb lending if governments fall short of their pledges to stem the sovereign debt crisis or face a shock their firewall can’t contain, the International Monetary Fund said. She speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)


IMF Says European Banks May Have to Sell $3.8 Trillion in Assets IBetOBi.aMPQ
IMF Chief Economist Olivier Blanchard said during a press conference yesterday, while it may be too early for a Eurobond, “euro bills” with maturity of less than a year would be a good first step. Photographer: Andrew Harrer/Bloomberg

“So far, deleveraging has occurred predominantly through buttressing capital positions and reducing non-core activities, leaving the impact on the rest of the world manageable,” the IMF said in its Global Financial Stability Report released today. “It is essential to continue to avoid a synchronized, large-scale, and aggressive trimming of balance sheets that could do serious damage to asset prices, credit supply, and economic activity in Europe and beyond.”

The Washington-based IMF sees a resurgence of Europe’s debt turmoil as the biggest threat to global growth even after steps taken by governments and the European Central Bank helped ease tensions in financial markets. The challenge for policy makers is to make sure banks keep lending to companies and individuals even as they boost capital to comply with regulators’ requests.

Banks Studied


Banks in the sample studied by the IMF reduced assets by almost $580 billion in the last quarter of 2011, it said.

Governments should complete and extend the measures already agreed upon to reassure investors if they want to limit the impact of banks’ deleveraging, the IMF recommended. That includes continuing to reduce budget deficits while supporting demand as much as possible, restructuring banks and having the region’s rescue funds inject capital directly into them, it said.

“For an effective monetary union, deeper integration is required,” the IMF said. “Fiscal arrangements will need to be redesigned to accomplish ex ante fiscal risk-sharing,” without which “countries will continue to face very different financing conditions and remain prone to having liquidity crises turn into solvency concerns.”

‘Euro Bills’


While it may be too early for a Eurobond, “euro bills”with maturity of less than a year would be a good first step, IMF Chief Economist Olivier Blanchard said during a press conference yesterday.

The IMF’s recommendations come as Managing DirectorChristine Lagarde seeks to boost the fund’s lending capacity from around $380 billion to shield the global economy against a deepening of Europe’s debt turmoil. She won pledges of fresh cash from Japan to Denmark over the past two days, adding to promises by euro nations to total about $286 billion.

“Many countries, notably in the euro area, have embarked on the process of fiscal consolidation to reach safer positions, but this effort will take many years,” the IMF said.

“In the meanwhile, sovereigns remain exposed to sudden shifts in investor perceptions that can tilt the balance from a good equilibrium -- which features low funding costs and affordable debt -- to a bad equilibrium -- where funding becomes very costly or even unavailable, reviving default risk.”

Spain Yields


Spain’s 10-year yields have jumped more than one percentage point since Prime Minister Mariano Rajoy said on March 2 that the nation won’t meet a budget deficit target for this year.

Analyzing funding costs, the IMF found that Italy and Spain face challenging situations. The average interest rate on Italy’s debt would rise to 5.3 percent by 2016 if current yields are maintained, the IMF said.

Outside Europe, Japan and the U.S. “continue to benefit from very low interest rates despite rapidly growing debt stocks which, even under the baseline, are making them more vulnerable,” according to the report. “Fiscal challenges are by no means confined to the euro area.”

While the impact of European bank’s deleveraging onemerging markets has been manageable so far, the IMF saw a risk that cross-border lending could further decrease, with emergingEurope as the most vulnerable region.

To contact the reporter responsible for this story: Sandrine Rastello in Washington at srastello@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
KAI
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IMF Says European Banks May Have to Sell $3.8 Trillion in Assets Empty Re: IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

Post by PrudenceArt Wed Apr 18, 2012 4:06 pm

I dont see the problem unless they dont own any dinar. The imf said that the dinar is very strong and Shabs said the dinar is going to be highest valued currency in the middle east.We have the paris club to forgive all the debt. We have US prinitng ll the money you need. What is the issue?

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IMF Says European Banks May Have to Sell $3.8 Trillion in Assets Empty Re: IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

Post by CaptnJerry Wed Apr 18, 2012 4:19 pm

PrudenceArt wrote:I dont see the problem unless they dont own any dinar. The imf said that the dinar is very strong and Shabs said the dinar is going to be highest valued STRONGEST currency in the middle east.We have the paris club to forgive all the debt. We have US prinitng ll the money you need. What is the issue?

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Inspired by Splovengates "Be ready between sunday and monday night, or maybe tuesday or wednesday, could also be thursday but definitely by friday.... probably next week, monday or late tuesday night, wednesday morning to hear the rv and should be cashing in on the following tuesday the 1st part of january or february. Sooner more than later. But no later than the beginning of 2013. Certainly not before then. Until then, let's enjoy the ride!


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IMF Says European Banks May Have to Sell $3.8 Trillion in Assets Empty Re: IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

Post by KAI Wed Apr 18, 2012 4:21 pm

No issue.

I see articles like this from the IMF as both providing a smoke screen and admonishing of ALL global economies to reduce debt, move away from cross-border lending, and greater fiscal responsibility and banking reforms.

At the same time, we have read that The IMF is sending positive messages of projections of increasing global economy growth and US growth increasing some 3.5% in 2012.

The global currencies reset and the RV we are all waiting patiently on, will usher in exceedingly abundant global economic growth, "boost capital to ensure greater liquidity" in banks and lending institutions, and provide speaking points post RV to explain what changed.
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IMF Says European Banks May Have to Sell $3.8 Trillion in Assets Empty Re: IMF Says European Banks May Have to Sell $3.8 Trillion in Assets

Post by 1alaskan Wed Apr 18, 2012 8:08 pm

CaptnJerry wrote:
PrudenceArt wrote:I dont see the problem unless they dont own any dinar. The imf said that the dinar is very strong and Shabs said the dinar is going to be highest valued STRONGEST currency in the middle east.We have the paris club to forgive all the debt. We have US prinitng ll the money you need. What is the issue?



Yes, Captn' is right, and there is a big difference!

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Being defeated is often a temporary condition. Giving up is what makes it permanent.
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Yesterday would have been better, but today is a good day

Remember as always, JMHO
Rantings from just north of sixty

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