Wednesday's Headlines: IMF says Europe debt crisis a heavy blow to global banks

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The International Monetary Fund says the world's financial system has been dealt a heavy blow by the European sovereign debt crisis, news media are reporting today.

European Union banks alone have $410 billion of credit risk due to the crisis, according to the IMF, and require capital from governments to calm investors and prevent a credit squeeze, Bloomberg says.

The assessment was published in the IMF's global financial stability report ahead of the annual meetings, the Financial Times reports. The most recent report came out in April.

"The report said credit, market and liquidity risks had all risen since the previous report in April, with monetary conditions the only aspect of financial market stability not to have worsened," the Financial Times writes.

The IMF emphasized that the eurozone crisis had entered a new "political" phase and that disagreements among policy makers on how to address problems had "impeded achievement of a lasting solution," the Financial Times writes, quoting from the report.

Other News:

Rivals wooing top UBS bankers as bonuses seen cut after rogue trading scandal. [Reuters]

US prosecutors close to charging ex-Goldman Sachs director with leaking insider information. [Wall Street Journal]

Capital One reassures critics that ING take-over will not pose systemic threats. [DealBook]

Community banks want a moratorium on mergers of large banks. [Reuters]

UBS, Citigroup board meetings in Asia signal growing importance of Asian investors. [Financial Times]

JP Morgan Worldwide Securities Services to grow direct custody and clearing services in Brazil and Russia. [On Wall Street]

Lloyd's of London withdraws deposits from peripheral European countries on debt crisis fears. [Bloomberg]

Ex-Primary Global Research's James Fleishman found guilty of insider trading. [DealBook]

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