The financial sector faces potential losses of nearly $1,000bn as a result of the credit crisis, the International Monetary Fund said yesterday, warning of further losses and writedowns on prime mortgages, commercial real estate, leveraged loans and consumer finance.

The IMF said total losses and writedowns would reach about $945bn, based on market prices in mid-March. Banks would suffer slightly more than half the total losses, with the rest falling on insurance companies, pension funds, hedge funds and other investors.