European banks facing $153bn capital shortfall

9 December 2011

Banks across Europe look set to face a challenge to comply with new capital standards rules, new figures have indicated.

Stress tests conducted on the largest financiers in the region have determined that these companies need to raise an additional €115 billion ($153 billion) in fresh capital to meet the requirements of regulatory bodies.

For instance, lenders in Germany are believed to need some €13 billion more Core Tier 1 capital to make sure they are in a position to resist the impact of any further crises.

Meanwhile, for Spanish and Greek banks this figure rises to €26.2 billion and €30 billion respectively.

Michael Kemmer, head of the BDB association of German financiers, has criticised these findings, saying that the stress test "has not contributed to market stabilisation".

"The lengthy and seemingly chaotic process has also strengthened the impression that every result is possible," he added.

Recently, Standard & Poor's warned banks across the European Union they could be in line for a credit rating cut in the near future.

By Gary Cooper

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