Reuters: Regulatory News: UPDATE 1-EU banks most in need of capital under new rules

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UPDATE 1-EU banks most in need of capital under new rules Sep 27th 2012, 11:48 Thu Sep 27, 2012 7:48am EDT LONDON, Sept 27 (Reuters) - Europe's top banks need to find more capital than rivals elsewhere in order to meet tougher rules coming into force in January, the continent's bank regulator estimated on Thursday. New global rules mean banks have to hold more capital in reserve to cover loans that could turn bad. Banks have in recent years been bolstering capital ahead of the new regime, designed to create a bigger safety net to protect taxpayers from having to bail out banks and avoid a repeat of the 2007-09 financial crisis. The European Banking Authority said if the rules, known as Basel III, had been in force at the end of December, the biggest 44 EU banks would have needed 199 billion euros to hold core capital of 7 percent of assets, the target level for banks to meet. That estimate was 32 billion euros lower than a similar assessment six months earlier, but still showed Europe's banks represented 53 percent of a global shortfall estimate released last week, so they may need to work harder than U.S. or Asian banks to bolster balance sheets. The tougher rules will be phased in from January. They will not be fully in place until 2019, but investors and regulators want banks to implement them early. The Basel Committee of global regulators last week estimated the biggest 102 banks globally would have needed 374.1 billion euros at the end of December to reach the required capital level. The Basel Committee and the EBA are carrying out appraisals every six months and say their estimates are not comparable to industry forecasts because banks should meet much of their needs by retaining profits, shedding loans and changing their business models, as well as taking into account the phased introduction. New Basel liquidity rules also look likely to leave banks short of funding. The liquidity coverage ratio (LCR), a key plank of new international standards, would have left EU banks 1.17 trillion euros short of funding if applied at the end of December. Banks have until 2015 to meet the LCR standard. Link this Share this Digg this Email Reprints

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