Business World

Sunday 20 October 2019

European banks need to raise €53bn: JPMorgan

Elena Logutenkova

Allied Irish Bank and Bank of Ireland are among European banks that need to raise a combined €53bn in additional capital, JPMorgan Chase & Co. analysts estimated.

European banks may need to raise €26bn to buy back stakes that are owned by governments and an additional €27bn to meet stricter capital requirements, analysts Kian Abouhossein and Cormac Leech said in a note to clients today.

Leaders of the Group of 20 countries last month agreed to develop rules to require banks to hold more and better-quality capital and cap leverage.

Regulators may demand banks have a minimum core tier 1 capital ratio, a measure of financial strength, of 8pc, JPMorgan said.

Commerzbank, Germany’s second-largest bank, has the highest capital deficit at €12bn, the analysts said.

Allied Irish Bank and Bank of Ireland may have to raise €7bn and €5bn respectively, while Societe Generale, France’s second- largest bank, needs €4bn in additional capital, they said.

Intesa Sanpaolo SpA, Banca Monte dei Paschi di Siena SpA and Deutsche Bank AG have capital deficits of about €3bn each, the analysts estimated.

By contrast, HSBC Holdings Plc, UBS AG and Credit Suisse Group AG have the highest amounts of excess capital, according to the analysts’ calculations.

The total capital deficit of €53bn excludes €46bn that Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc would together need to raise if they dropped out of the UK government’s Asset Protection Scheme, the analysts said.

“Given the magnitude of these capital needs, we believe a complete withdrawal of the APS is highly unlikely,” they said.


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