Washington  - Financial institutions could suffer losses as high as 945 billion dollars from the ongoing credit crisis and should take immediate action to increase transparency and correct excessive risk strategies that sparked the current turmoil, the International Monetary Fund said Tuesday.

The Washington-based lender said losses from already falling housing prices and the resulting subprime mortgage market crisis would total 565 billion dollars.

But that figure could be compounded as the crisis spreads to other credit sectors, including commercial real estate, corporate loans and other consumer loans, the IMF said in its Global Financial Stability Report, released in the run-up to a series of annual spring time meetings this weekend between members of the IMF and its lending partner the World Bank.

"What began being a credit shock in the subprime market is now starting to spread to a broader range of assets, and that is bringing additional pressure on the balance sheets of some of the financial institutions," said Jaime Caruana, director of the IMF's Monetary and Capital Markets Department.

Banks should disclose all looming writedowns and new risk management strategies as soon as possible to quell market fears amid the ongoing crisis in the global financial sector, the IMF said.

The credit crisis - sparked by a record number of defaults by subprime mortgage holders in the United States - was the result of an antiquated system of financial regulation and a "collective failure to appreciate the extent of leverage taken on by a wide range of institutions," the report said.

Banks have already been forced to write off more than 200 billion dollars as the value of mortgage-backed securities has dropped dramatically since the summer of 2007. The availability of credit to ordinary consumers has tightened as a result.

The Federal Reserve, in a series of unprecedented moves often coordinated with other central banks, has made available more than 400 billion dollars in Treasury securities to struggling investment banks through a variety of lending facilities.

The central bank also bankrolled the sale of Bear Stearns to JPMorgan Chase to prevent the fifth-largest US investment bank from declaring bankruptcy.

Caruana said the Fed's efforts to inject liquidity into the market, including the bailing out of Bear Stearns, had "reduced the probability of a tail event in the financial system."

But the IMF report also warned of an even greater "wrenching adjustment" of credit markets if action is not taken immediately in the private sector to bolster confidence in financial markets.

Much of that action should revolve around new disclosure, transparency and regulatory practices by investment banks and other institutions, which until now had taken on excessive risks and left themselves open to the kind of "unwinding" now being experienced.

Banks should quickly disclose new strategies aimed at correcting the past failures in risk management, while governments should increase their supervisory role to ensure excessive risks are not taken in the future.

The IMF said the financial crisis was also being compounded by a wider economic slowdown. The lender last week dropped its global growth forecast for 2008 to 3.7 per cent, down from 4.1 per cent in January and 4.8 per cent in October.(dpa)