Crackdown on risk hits Barclays, Deutsche
A $9bn (€6.8bn) rights issue and a fresh purge of assets are among the measures Britain's Barclays and Germany's Deutsche Bank announced yesterday to meet tougher rules on risk, raising concern among investors that regulators will push other European banks into similar action.
Unlike their US rivals, which were quickly restructured and recapitalised in the heat of the financial crisis, Europe's banks are still trying to extricate themselves from the legacy of 2007-09, with regulators fearful that some are still too big to fail.
"If Barclays needs to raise that much capital, and it was relatively well capitalised by European standards, it suggests we've got a long way to go in Europe," said the head of equities at one UK fund manager.
Barclays bore the brunt of a surprise new British curb on banks' risk exposure, requiring it to raise an extra £12.8bn of capital in the next year.
To meet the new target, Britain's third-largest bank by market value said it would tap shareholders for £5.8bn, shrink its loan book by £65-80bn and sell £2bn worth of bonds, sending its shares sliding over 7pc.
In the eurozone, national regulators are pushing banks to get their houses in order in anticipation of the European Central Bank taking over direct supervision of the bloc's largest banks next year. (Reuters)