IMF calls for European bank tests

The IMF wants governments to take steps to get banks to reveal losses

The International Monetary Fund (IMF) has called for European banks to be subjected to "stress tests" like those applied to US banks.
National supervisors in each country should carry out the tests, the IMF's Europe director Marek Belka said.
In its spring forecast, the IMF says Europe's advanced economies will shrink by 4% in 2009 and 0.4% in 2010.
It expects Europe's emerging economies to contract by 4.9% in 2009, before returning to growth of 0.7% next year.
Among eurozone economies, Ireland is among the hardest hit. Its economy will shrink by 8% this year. But the Baltic countries of Estonia, Latvia and Lithuania will see their economies shrink by more than 10%.
"Europe is facing the economic storm of a lifetime and it urgently needs to weatherproof its institutions," said Mr Belka, who is head of the IMF's European department.
Tests wanted
He called on European governments to follow the lead of the US and UK and subject their banks to so-called "stress tests".
SUPPORT FOR FINANCIAL SECTOR
UK - 20.2% (of GDP)
Norway - 15.8%
Germany - 3.7%
France - 1.5%
Ireland - 5.3%
Switzerland - 1.1%
Source: IMF
Such tests would help restore confidence to the banking sector and get banks to come clean on losses, he said.
The IMF also gave details on the support each European government has given to the financial sector.
The UK has by far committed the largest amount of financial support - 20.2% of GDP, it said.
The average for Europe's advanced economies was 6.3% of GDP.
The figures include direct capital injections, steps to deal with toxic assets and other measures such as Treasury guarantees of support through central banks.
It does not include other guarantees to the banking sector, which amounted to an additional 51.2% of GDP for the UK and 257% in Ireland.