European lenders may require selling as much as _2.8 trillion in assets next year if governments fail to curtail the prevailing fiscal crisis, the International Monetary Fund (IMF) said.

In its Global Financial Stability Report, the IMF said warned that failure to meet existing targets would reduce lending further and obstruct economic growth.

As per the global lender's estimates, economies of Cyprus, Ireland, Greece, Italy, Spain and Portugal could suffer a decline up to 4 percentage points in growth next year.

Banks and organisations like the National Asset Management Agency, which possesses massive swathes of commercial property, will also suffer a sharp decline in the value of their properties if banks are forced to sell assets.

Christine Lagarde, managing director of the IMF, hinted that the fund does not require lending money to debt-ridden Spain to help it arrest its fiscal crisis.

In a recent interview, Mrs. Lagarde said, "Some people say unless you have skin in the game, meaning money, you are not really respected, you are not heard."

Meanwhile, S&P hacked Spain's sovereign credit rating by two notches to BBB-minus, citing the countries deepening economic recession and the government's incapability in tackling fiscal crisis.

Earlier this week, Washington-based IMF slashed its global growth projection and warned of even slower growth if European leaders fail to address prevailing threats to their economies.