International Monetary Fund (IMF) will launch the first of its mandatory health checks on big banks this week under a beefed-up inspection scheme following criticism of previous tests.
The probes will start in Britain, to be followed by IMF tests of banks in Sweden, the Netherlands, Germany and Luxembourg ahead of wider tests by the EU to assess the health of lenders.
The IMF move comes as a rating agency study found that more than 30 of the world’s top banks have insufficient capital to withstand a big problem, including Credit Suisse, Bank of America and Mizuho Financial.
Standard & Poor’s said most banks had improved their capital adequacy in the past two years but many still fell short and the risk-adjusted capital positions of banks was “generally a rating weakness”.
The EU has come under pressure after finding only a small capital shortfall among banks last year, just before spiralling problems at banks forced an international bailout of the Irish government.