LONDON (Reuters) - The world's economic recovery is weak and some assets are still overpriced, a senior International Monetary Fund official said on Thursday.
"The global economic recovery is really mediocre and subject to downgrade risk. We have been downgrading our economic forecasts for the past five years," Jose Vinals, director of monetary and capital markets at the IMF, told the British Bankers' Association annual conference.
"There are many markets where assets are now slightly overpriced. You don't find anything that's grossly out of line, grossly super-valued or over-valued but you see many little discrepancies across many markets regarding valuations," Vinals said.
Stock markets across the world have tumbled in recent days after data in China and the United States fanned fears the world economy could be even weaker than thought.
Turning to banks, Vinals said lenders were facing a "low profitability" problem in many parts of the world, with banks struggling to adapt their business models.
He said an IMF study of 300 of the largest banks showed only about 60 percent had a structure that was able to make a reasonable rate of return over time to be able to build capital and support new lending.
Only about 30 percent of eurozone banks could meet that requirement, compared to about 80 percent in the United States, Vinals said.
Following a "major regulatory revolution", banks now needed certainty and Vinals urged politicians to keep up the momentum to complete the job so that banks have that certainty to adapt their business models.
(Reporting by Huw Jones, Steve Slater and Matt Scuffham)