Tuesday, November 24, 2009

"Brown Brother Regarding Banks" and "IMF's Strauss-Kahn Says Half of Bank Losses Are Undisclosed" (FAS; FAZ)

First up, from Across the Curve:
Heightened concerns about the global banking sector are front and center today. There are two press articles to note. The first is the FAZ story warning that the two regional banks that hold a majority stake in West LB indicate they are prepared to let the bank become insolvent. This may be an attempt to force capital injections by the German government. At least 6 bln euros may be needed by the end of the month. The second is an FT article reporting on an S&P study on the financial strength of large banks ahead of the new revised Basel II rules expected early next year. Simply put, some banks are better capitalized than others. S&P says, for example, that Japanese banks are among the least capitalized. Fitch echoed this sentiment noting the weak loan quality and poor capitalization by international standards. The Topix bank share index lost almost 4% today. At 131.12, it is within a few percentage points off the multiyear low set in March near 125.65 and puts the index 30% off the highs set in mid-June...MORE
And from Bloomberg:
International Monetary Fund Managing Director Dominique Strauss-Kahn said that about half of bank losses from the global financial crisis have yet to be revealed.

“It is our view we are still in the situation where a lot of losses haven’t been disclosed,” Strauss-Kahn said during questions at the Confederation of British Industry’s conference in London today. “How much is a difficult assessment, but let’s say something which is close to half of it.”

Banking systems “remain undercapitalized” in many advanced economies with “far from normal” financial conditions, Strauss-Kahn said in a speech to the conference. The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery.

“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.”>>>MORE