Germany facing prospect of bank bailout
Published 09/12/2011 | 05:00
GERMANY was last night facing the prospect of an imminent bank bailout after its institutions were hit with a €13.1bn recapitalisation bill by European regulators -- more than double the demand imposed on them just six weeks ago.
The worsening figures came after the European Banking Authority updated its data to reflect banks' positions at the end of September, three months after the previous snapshot was taken.
The capital demands largely stem from writedowns applied to the banks' holdings of bonds issued by weak countries like Greece, Italy, Spain and Ireland.
Overall, banks across Europe were found to need some €115bn of extra capital to bring them up to the EBA's minimum levels, against the €106bn figure published in late October.
Ireland's banks had no capital demand in the October 26 tests or in last night's version, reflecting the cushion created by their €23bn recapitalisation.
Banks have until January 20 to present plans for raising the cash.
The results of last night's tests were received with scepticism by some experts, since the capital demand had gone up so significantly in such a short period. Others pointed to the failure of previous EBA tests to predict collapses like Dexia, which passed an earlier version of the test and ran aground soon after.
Germany's Commerzbank was one of the worst hit by the latest tests, with its capital gap widening from €2.9bn to €5.3bn. In a statement, the bank said it "stands by" its "intention not to make use of additional public funds", but analysts fear the bank won't be able to avoid a bailout. Commerzbank has been rescued before and remains 25pc owned by Germany.
Deutsche Bank was listed as needing some €3.2bn, though the bank last night said that the figure did not take account of measures it has already planned to raise capital.
France's banks are also heavily exposed to sovereign debt issued by weak countries, but their capital demand slimmed some €1.5bn to €7.3bn.
Spain's banks were left with a €26.1bn capital demand after the latest tests, virtually unchanged on the last round.
In Italy, banks were found to need €15.4bn, while Portugal's tally came in slightly down at €6.95bn and Austrian lenders require some €3.9bn.