Comments Subscribe to Personal Liberty News Feed Subscribe to Personal Liberty
 

European Banks Picking Up New Capital

FRANKFURT, Germany, Jan. 25 (UPI) — Banks in Europe are well on their way toward satisfying new capital requirements set by regulators, data shows.

Banks have been ordered to raise an additional $150 billion by summer to meet requirements meant to ensure they have enough capital on hand to weather a financial downturn, The New York Times reported Wednesday.

European banks, however, have already raised $52.8 billion, a report compiled by Citigroup says.

Citigroup also said the banks were poised to raise an additional $32.2 billion through June 2012 by reducing bonuses and lending.

Accountants call the strategy retained earnings. In this manner, Deutsche Bank in Germany could add $4.7 billion in new capital by June. That is $600 million more than the European Banking Authority has asked Deutsche Bank to raise.

BNP Paribas in France can use the same method to raise $5.3 billion, far more than authorities have mandated.

“BNP has huge capital needs, but can make the target in one swoop by retaining its shareholder dividend,” said an investment banker in Europe who requested anonymity.

Other banks can retain shareholder dividends to make up the needed capital. Or they can buy back some dividend-paying securities, which can be converted to equity.

Citigroup estimated banks in Europe had already raised $20.9 billion through this method, which is known as liability management exercises.

UPI - United Press International, Inc.

Since 1907, United Press International (UPI) has been a leading provider of critical information to media outlets, businesses, governments and researchers worldwide.

Facebook Conversations

Join the Discussion:
View Comments to “European Banks Picking Up New Capital”

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.

Is there news related to personal liberty happening in your area? Contact us at newstips@personalliberty.com

Bottom
close[X]

Sign Up For Personal Liberty Digest™!

PL Badge

Welcome to PersonalLiberty.com,
America's #1 Source for Libertarian News!

To join our group of freedom-loving individuals and to get alerts as well as late-breaking conservative news from Personal Liberty Digest™...

Privacy PolicyYou can opt out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.