IMF report: Citigroup, Barclays among banks that could struggle in near future

By Sara Shayanian  |  Oct. 11, 2017 at 11:39 AM
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Oct. 11 (UPI) -- The International Monetary Fund has named nine big banks that could struggle to make a profit on par with other banks in the coming years.

Those banks, named by the IMF in its biannual Global Financial Stability Report, are Citigroup, Barclays, Deutsche Bank, Société Générale, UniCredit Group, Standard Chartered, Sumitomo Mitsui Financial Group, Mizuho Financial Group, and Mitsubishi UFJ Financial Group are all expected to deliver subpar profits.

The banks together represent $47 trillion in assets, or about one-third of global banking loans and assets.

"About a third of banks by assets may struggle to achieve sustainable profitability, underscoring ongoing challenges and medium-term vulnerabilities," the IMF said in the report.

The IMF noted that the consensus among banking analysts was for a return on equity of less than 8 percent by 2019 for each of the nine banks. If banks don't earn above 8 percent for cost of equity, they are unable to maintain consistent profits and typically struggle to build capital.

Despite projections, Wednesday's report notes that the large banks have become "more resilient since the crisis with stronger capital and liquidity."

The IMF report looked into 30 international banks that have been deemed as systematically important banks based on their size and complexity.

The report comes as representatives and finance ministers from 189 countries are gathering in Washington, D.C., for annual meetings between the World Bank and IMF.

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