Europe’s banks hit regulatory capital targets

Tim Wallace
Follow Tim
ALMOST every bank which was dangerously undercapitalised in February has now met regulatory targets, the European Banking Authority (EBA) revealed yesterday.

Five months ago the EBA warned that 31 banks required €76bn (£60bn) between them to meet the nine per cent core tier one capital target.

The updates from June show an aggregate increase of €94.4bn, leaving 27 of those banks either above that level or with advanced plans to reach the required level.

Of the remaining four banks, Austrian Volksbank AG, Franco-Belgian Dexia and German WestLB AG were all in restructuring programmes back in February, and Spain’s Bankia has gone into a rescue programme since then.

“Our work in strengthening the capital base of banks is proceeding to plan,” said EBA boss Andrea Enria.

“European banks are now in a stronger position, which should support lending to the real economy and gradually restore banks’ access to market funding.”

The vast majority of the improvement came from retained earnings, new equity issuance and liability management, which accounted for €71.6bn – 95 per cent of the initial shortfall and 76 per cent of the total gain.

As a result, the EBA does not believe the banks’ push to improve the capital ratios hit lending to households and businesses, and did not lead to fire sales of assets – disposal of assets accounted for 8.1 per cent of the improvement, and led to a reduction of €90bn in risk-weighted assets, or 1.8 per cent of the total in September 2011.

But not all of the 27 managed to reach their capital targets alone – seven are relying on government backstop measures to reach the nine per cent level.

Meanwhile Slovenian bank Nova KBM reached the nine per cent level before recognising further credit risk problems, and has submitted further plans to meet the target.

• Santander
• Caja de Ahorros y Pensiones de Barcelona
• Banco Popular Espanol

• Nova Ljubljanska Banka

• Erste Group Bank
• Raiffeisen Zentralbank Osterreich

• BNP Paribas
• Societe Generale

•SNS Bank

• Deutsche Bank
• Commerzbank
• DZ Bank
• Norddeutssche Landesbank
• Ladesbank Hessen-Thuringen

• DNB Nor Bank

• Caixa Geral De Depositos
• Banco Comercial Portugues
• Espirito Santo
• Banco BPI

• Marfin Popular Bank
• Bank of Cyprus

• Unicredit
• Banca Monte Dei Paschi De Siena
• Banco Popolare
• Unione Di Banche Italiane