Europe′s banks told to plug 115 billion euro capital hole | Business| Economy and finance news from a German perspective | DW | 08.12.2011
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Europe's banks told to plug 115 billion euro capital hole

European banks have been told to increase their capital by a total of 114.7 billion euros to make them strong enough to withstand the eurozone debt crisis.

Euro bills

Germany's banks need some 13.1 billion euros

Europe's banks have been told to increase their capital by a total of 114.7 billion euros to make them strong enough to withstand the eurozone debt crisis.

The European Banking Authority (EBA) - the EU's banking regulator - said in a statement on Thursday that its final recapitalization plans were part of "co-ordinated measures to restore confidence in the banking sector" ravaged by the financial crisis.

The estimated capital shortfall is almost 8 percent higher than the 106.4 billion euros estimated in October, due to revised predictions for Germany, Italy, Austria and Belgium.

Massive gap for German banks

The shortfall for German banks is some 13.1 billion euros, up from the 5.2 billion euros estimated in October, according to new data made available by the Bundesbank.

European stock markets and the euro fell in volatile trading on Thursday, mainly in reaction to moves by the European Central Bank earlier in the day, but also in anticipation of the announcement from the London-based EBA.

Among Germany's major banks, the biggest, Deutsche Bank, would need 3.2 billion euros in additional capital, up from October's estimate of 2.8 billion euros.

The country's second-biggest bank, Commerzbank, would need 5.3 billion euros, much higher than their previous estimate of 2.9 billion.

The German Banking Federation said the EBA's findings were "arbitrary," claiming that recent bank stress tests had "not contributed to the stabilization of markets." In fact, "the opposite is true," the federation said.

The four other German banks that failed to clear a bar set by the regulators at the end of September were the smaller DZ bank and three regional banks, Helaba, NordLB and WestLB.

Author: Joanna Impey (AFP, dpa, Reuters)
Editor: Andreas Illmer

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