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Half of bank losses likely still hidden, IMF chief says

Section: Daily Dispatches

By Estelle Shirbon
Tuesday, November 24, 2009

PARIS -- Half the losses suffered by banks could still be hidden in their balance sheets, more so in Europe than in the United States, the International Monetary Fund's chief, Dominique Strauss-Kahn, was quoted as saying on Tuesday.

In an interview with French newspaper Le Figaro, Strauss-Kahn also said the IMF thought the euro currency was probably a bit too strong.

"There are still some important losses that have not been unveiled," Strauss-Kahn was quoted as saying in response to a question on banks, according to excerpts of the interview that were sent to media ahead of publication on Wednesday.

"It's possible that 50 percent" of bank losses "are still hidden in their balance sheets. The proportion is greater in Europe than in the United States," he said.

Asked about currencies, Strauss-Kahn noted that Europeans were the ones who have been complaining the most about the strength of their currency.

"The IMF also thinks that the euro is probably a bit too strong, but it's very difficult to determine in a way that is unquestionable the level at which currencies would be balanced," he said.

"Europeans must, however, better affirm their economic strategy if they do not want to let the Sino-American couple dominate the global debate for the next 20 years," he said.

Strauss-Kahn said the two crucial factors to achieve the status of major economic power today are a big population and technological advances.

"The enlarged Europe has a big population, with 500 million inhabitants, but on the technological front things have not moved on sufficiently since the Lisbon strategy was launched in 2002," he said, referring to the 27-member European Union.

The Lisbon strategy was an EU roadmap that was supposed to cut red tape, promote growth and make the bloc the world's most innovative region.

"I note that the technological debate, which today is focused particularly on energy, is much more vigorous in the United States than in Europe," Strauss-Kahn said.

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