The global financial crisis meant banks spent 2009 recapitalising. As a result, the aggregate Tier 1 capital of the Top 1000 World Banks has increased by 15%. However, The Banker’s research shows that provisions for loan losses – which provide a crucial indicator of a bank’s ability to absorb writedowns – are likely to continue to impact on banks’ profits across the globe.
Sizeable provisions are a prerequisite for banks trying to safely navigate the potential second wave of writedowns. According to The Banker’s data – based on information submitted for the Top 1000 World Banks 2010 ranking – provisions for loan losses for 2009 have reached about $301.5bn in Europe (of which at least $215bn is for the eurozone), $250bn for North America, and $55bn for Asia (excluding China, for which no data is yet available).
