Over $38 billion to buy back stakes owned by governments and an additional $40 billion to reach stricter capital requirements, JPMorgan estimates
The European banks, including Commerzbank AG, Allied Irish Banks, Bank of Ireland and Societe Generale SA, are required to raise a combined $78 billion in additional capital – reported Bloomberg, quoting an analysis by JPMorgan Chase.
European banks are required to raise $38 billion to buy back stakes that are owned by governments and an additional $40 billion to reach stricter capital requirements, reported the news agency citing analysts Kian Abouhossein and Cormac Leech.
Last month, the leaders of the Group of 20 countries agreed to develop rules to require banks to hold more and better-quality capital and cap leverage. Regulators may demand banks have a minimum core tier 1 capital ratio of 8%, said JPMorgan.
The analysts stated that the Germany-based Commerzbank has the highest capital deficit at $17 billion. Allied Irish Banks and Bank of Ireland may have to raise $10 billion and $7 billion respectively, while France-based Societe Generale requires $6 billion in additional capital.
The analysts estimated that the Intesa Sanpaolo SpA, Banca Monte dei Paschi di Siena SpA and Deutsche Bank AG have capital deficits of around $5 billion each. According to the analysts’ calculations, HSBC Holdings, UBS AG and Credit Suisse Group AG have the highest amounts of excess capital.
It was added that the total capital deficit of $78 billion excludes $67 billion that Royal Bank of Scotland Group and Lloyds Banking Group would together need to raise, if they dropped out of the UK government’s Asset Protection Scheme, reported the news agency.