International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn says banks have yet to declare about 50 percent of their losses from the financial crisis.
“It is our view we are still in the situation where a lot of losses haven’t been disclosed,” he said at a conference in London.
“How much is a difficult assessment, but let’s say something which is close to half of it.”
Banks “remain undercapitalized” in many industrialized nations with “far from normal” conditions, Strauss-Kahn said in a speech to the conference.
In September, the IMF estimated banks have $1.5 trillion of bad assets still on their books. It cut its forecast for total global bank writedowns by 15 percent to $3.4 trillion in September, thanks to easing credit conditions and economic recovery.
The IMF said then that U.S. banks have owned up to 60 percent of their losses, beating the 40 percent total in the Eurozone and the United Kingdom.
“Probably a little more has been disclosed in the U.S. and a little less in Europe, but it’s almost half and half,” Strauss-Kahn said. “So, we still have a long way to go.”
Independent bank analyst Meredith Whitney sees plenty of trouble ahead for banks. “The banks are still grossly overvalued,” she told Bloomberg.
“People are expecting something great to happen in 2010, and I think they are going to be severely disappointed.”
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