MOST plans put forward by European banks to improve the industry’s resilience are in line with what was asked of them, their regulator said on Monday, as some banks made last-ditch efforts to meet the demand to lift capital.
Italy’s Banco Popolare unveiled a plan to raise hundreds of millions of euros by buying back hybrid bonds, as one of 31 banks told to fill a €115bn hole in their balance sheets by the end of June.
Intesa Sanpaolo also said it will boost capital by buying back debt, even though it has not been ordered to do so.
The aim is to ensure the industry is strong enough to withstand an economic slowdown and the Eurozone’s sovereign debt crisis.
The European Banking Authority (EBA), chaired by Andrea Enria (pictured), meets tomorrow and on Thursday to assess each bank’s plan.
“The overwhelming majority of measures outlined in the plans appear to be, in aggregate, in line with the spirit and the letter of the EBA’s recommendation,” the EBA said in a statement yesterday, saying reports suggesting otherwise were “inaccurate and misleading”.
The watchdog said it was still reviewing the plans but it had been “impressed with the banks’ willingness to undertake all appropriate measures” to meet their needs.
Banks have several options to find the capital required. They can retain earnings, shrink loans to customers, convert hybrid debt into equity, buy back their own bonds, sell assets, and cut dividends or staff pay.
