David Prosser: Banks to seek billions of euros
Friday 17 December 2010
Outlook Coming soon to a stock market near you: more capital raisings from banks. The Basel Committee, the global banking regulators who earlier this year set new standards for capital, liquidity and leverage, has been doing its sums. Yesterday, it said the world's largest 94 international banks needed to raise €577bn in order to comply with the new capital requirements, due to be introduced gradually over the six years from 2013 onwards.
That is the money required to get them above the 7 per cent core tier one capital ratio that the Basel III rules require as a minimum from 2019 for all those banks that wish to be free from restrictions on bonuses and dividends (4.5 per cent is the absolute minimum, which all 94 banks already meet).
The €577bn reflects the 5.7 per cent ratio average amongst the biggest banks, which will also need to take action on liquidity and leverage, the Basel Committee said yesterday.
Clearly, there is plenty of work to be done. Note however, that Britain's banks look comparatively healthy – all are well above that 7 per cent minimum already. European banks less so, however.
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