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Wednesday, April 22, 2009

IMF: $2.8 Trillion in Estimated Writedowns by Banks

The IMF released the Global Financial Stability Report. One section details the estimated $4.1 trillion in writedown losses, of which $2.8 trillion are expected to be held by banks.

Of estimated potential writedowns of $4.1 trillion on mature market credit for global market participants, banks are expected to suffer $2.5 trillion. In addition, global banks are expected to take an additional $340 billion of writedowns on exposure to emerging market assets, bringing the total to $2.8 trillion (Table 1.15).

Although Europe excluding U.K. banks are expected to suffer a sizable portion of its writedowns on assets within the region, a substantial proportion of the total, 44 percent altogether, is borne on assets outside the region, mostly in the United States, and in emerging European markets. By comparison, U.S. banks are expected to suffer only 8 percent of writedowns on non-U.S. exposure. Similar to continental Europe, U.K. banks suffer 45 percent of writedowns on nondomestic assets. For banks in Asia, potential writedowns on U.S. assets (35 percent) are higher in dollar terms than on any other regional exposure.
Table 1.15 (loss of $2.8 trillion by asset origination region)

Table 1.15 (loss of $2.8 trillion by region held)