In the Global Financial Stability report, issued last week, the IMF said there had been “considerable progress,” in the last few years in the European banking sector, and that the banks now have more capital (it noted recent recapitalisations in Portugal and Italy), more demanding regulation and efforts continue to adapt business models, assisted by economic improvements.
However, it warned, this has not been enough to “restore profitability” of the banks in a solid way, and that many challenges remain.
In “Italy, Portugal and Spain there is a large number of branches and staff in relation to banking assets,” it added.