Monday, Oct 5th, 2009
European banks may raise an additional $78 billion in capital over the next six months as they attempt to boost capital ratios towards levels proposed under the globally agreed Basel II bank capital rules, J.P. Morgan Securities said.
Banks appear focused on a revised minimum Core Tier 1 ratio — a standard of capital held against risky assets — of 8 percent that could lead to potential capital raising of $78 billion, of which $38 billion will be to repay government funds and $40 billion will be fresh capital, JP Morgan said.
With an expected capital need of $17 billion at Germany’s Commerzbank, $10 billion at Allied Irish Banks, $7 billion at Bank of Ireland and $6 billion at France’s Societe Generale, the four account for 52 percent of the total capital requirement seen for European banks, JP Morgan analysts said.
The Group of 20 leading industrial and emerging market countries agreed in September to finalize new capital rules by the end of 2010 and set an end-2012 date for implementing the tougher capital rules for banks.