The International Monetary Fund estimated that financial institutions worldwide may face losses of $945bn (€602bn) over the next two years stemming from housing turmoil and the global credit crunch, and urged the industry and regulators to revamp their thinking on managing risks.

According to the IMF calculations, which were made in mid-March, losses on mortgages and securities involving residential properties could total $565bn, while commercial real-estate securities would produce an additional $240bn in write-offs. Corporate loans are expected to account for $120bn in losses, and consumer loans would amount to $20bn.