The European banking sector is short to the tune of around €280bn (£233bn) according to a new report by PwC. Banks will need to make up that gap as a result of new regulation next year.
The shortfall stems from the combined impact of Basel III capital ratio requirements, leverage ratio requirements, the European Central Bank's Comprehensive Assessment, and other possible developments.
PwC warns that "traditional capital mitigation responses will not come close to closing this gap."
Banks will have to raise €180bn of new equity, PwC estimates. Miles Kennedy, financial services partner at PwC, says that while the environment for raising capital is favourable, that's a lot for the market to absorb - "So the competition for new capital will be fierce."
Between the requirements under Basel III and the ECB Comprehensive Assessment, European banks are facing another turbulent couple of years.
For banks outside the scope of the ECB, the challenges are no less intense – a point reinforced by the recent exchange of letters between the UK Chancellor and Bank of England Governor on the subject of leverage.