This ratio, though still far below the level recorded in the United States, is rising rapidly; it is worth recalling that at the end of the much less severe recession in the 1990s it exceeded 70 per cent.
Just as banks have been asked to shed full light on the troubled assets that have been on their books since the onset of the crisis, it is equally important that they conduct a realistic, unflinching estimate of the loan losses that they are bound to incur in the months to come; and that this estimate serve as the basis for conducting balance-sheet management and determining capital injections, dividend policy and executive compensation.