German lenders need another €14bn for capital requirements

City A.M. Reporter
GERMANY’S financial regulator BaFin yesterday warned that major lenders in Europe’s largest economy still need an extra €14bn in capital to fulfil stricter bank safety rules.

Thanks to capital increases and the selling down of risky assets, German lenders have reduced their capital shortfall from €32bn and now have regulatory core capital ratios of between 10 per cent and 18 per cent.

International regulators agreed to introduce stricter bank safety rules by the end of 2018 to improve their capital cushions, a way to help absorb potential losses in a crisis.

Banks will need to have a core tier one ratio of six per cent by 2019. The rules, known as the Basel III accord, are being phased in over six years from January this year.

The Basel rules were the world's main regulatory response to the 2007-09 financial crisis that saw Lehman Brothers collapse and forced governments to rescue undercapitalised lenders.