Wall Street Journal
December 8, 2011
European banks must come up with a total of €114.7 billion ($153.8 billion) in new capital by next June, the European Banking Authority said Thursday, as regulators took their latest stab at restoring confidence in the Continent's beleaguered banking industry.
The capital shortfalls are spread across more than 30 banks in 12 countries. A total of 71 banks were subjected to the EBA's exam.
The cumulative amount banks need to raise—by shedding assets, retaining profits, selling shares or other means—is slightly greater than the EBA's preliminary €106 billion estimate in late October. That is largely because the EBA tightened the criteria it used to determine how banks can fill their holes. Individual banks will need to inform their national regulators by Jan. 20 about how they intend to come up with the funds.
The EBA's exercise, underway since early October, is one of the centerpieces of broader efforts to defuse Europe's two-year financial crisis. The trouble, stemming largely from doubts about the abilities of some countries to repay their debt, has engulfed the banking industry because many lenders are holding billions of euros of such assets.
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