Banks take big leap toward capital target

Tim Wallace
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THE BIGGEST banks in the EU are almost all now compliant with the incoming Basel III rules after a huge drive to raise capital, the European Banking Authority showed yesterday.

Ninety-three per cent of major lenders now have core tier one capital buffers of 4.5 per cent or above, the minimum level that will be required.

The remainder need a total of just €3.7bn (£3.2bn) to hit the targets, according to the study based on data from June 2012, after raising €166bn in the previous six months.

However there are additional buffers on top of the 4.5 per cent. By 2019, major banks will need capital worth at least seven per cent, requiring an additional €112.4bn.

The shortfall on higher capital ratios is also well down on the past six months, falling €86.2bn as average core tier one capital ratios increased by 0.9 percentage points.

But International Monetary Fund head Christine Lagarde warned the figures may not be fully reliable or evenly applied across banks and national jurisdictions.

“Different rates of implementation could contribute to dilution of overall minimum standards,” she said.

These delays affect longer term business decisions, straining credit markets and spilling over to the real economy,” Lagarde added.