The International Monetary Fund on Wednesday said nine of the world’s biggest financial institutions may find it hard to thrive in the new global economy and deserve heightened attention from regulators.
In its latest report on global financial market stability, the IMF listed nine banks: Citigroup C, -0.32% Société Générale GLE, -0.06% SCGLY, +0.13% UniCredit Group UCG, +2.06% Deutsche Bank DB, -0.41% DBK, +0.10% Barclays BARC, +0.21% Standard Chartered STAN, -0.30% Sumitomo Mitsui Financial Group 8316, -0.44% Mizuho Financial Group MFG, -0.28% 8411, -0.20% and Mitsubishi UFJ Financial Group MTU, +0.31% 8306, -1.03% as banks that exhibit “both thin capital buffers relative to future regulatory requirements and relatively weak profitability to build those buffers over the next few years.”
Deutsche bank is the Jenga piece that will cascade the whole system. If you think that will not have an effect on the whole world, you need to do your economic homework. – Aaron Shoun
The IMF said some of these banks continue to grapple with legacy issues. Others, mainly the European investment banks, “still face the problem of defining and executing profitable business models.”
Low domestic interest rates also affect the profitability of the troubled Japanese banks, the IMF said.
Problems in even a single one of these global systemically important banks could generate systemic stress – IMF
Citi, for example, was a poster child of the financial crisis, with the company forced to cleave off billions in businesses to comply with more stringent regulatory requirements in the wake of the mortgage-fueled, global banking implosion.
Original Source: Market Watch