James Moore: Crisis? What crisis? Banks wave away calls to raise cash

James Moore
Sunday 30 October 2011 23:50 GMT
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Outlook So Europe's banks need to raise €106bn (£93bn), which was the final number to come out of the "phew they've actually done it" crisis meeting on the Continent's sovereign debt crisis.

If you believe the European Banking Authority, banks in Spain require €26bn to get to the required capital levels. That's quite a chunk by any measure. And yet on the very same day Santander airily dismissed any concerns about a cash call, claiming it could meet the requirements without raising capital or cutting its dividend. (Deutsche Bank and Commerzbank have said much the same. German banks need €5.2bn.)

A number of analysts have, naturally, suggested otherwise. Of course, analysts aren't always right. There were some in Britain who said that the likes of HBSC, Barclays and RBS would need to raise money, but the EBA has said British banks don't need a penny. Score one for the FSA/Bank of England.

As for the EBA, the analysts and the case of Santander (and of Commerzbank and of Deutsche), it may be that some people have got their figures wrong. And it may be that by some miracle everything is indeed rosy and all the requirements can be met by retained profits. And it may be that we'll see one or two cash calls which aren't categorised as such over the next few months. Things like quietly disposing of businesses here and there, or partially floating them off.

That's the way things go in the wonderful world of banking. And they wonder why no one trusts them any more. If I were investing now I'd be looking to buy shares in people who make beds. There'll probably be plenty of demand for new ones with a space under which people can stash their money.

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