EBA publishes final report on European banks’ recapitalisation
04 Oct 2012

The European Banking Authority (EBA) has published its final report on the European bank recapitalisation exercise, which led to an increase in banks’ capital of more than €200 billion between December 2011 and June 2012. The report reveals that 27 initially undercapitalised banks strengthened their aggregate capital position by €116 billion. The EBA’s Board of Supervisors emphasised the continuing need for banks to maintain their capital levels in light of both the challenging market conditions and the planned implementation of the new Capital Requirements Directive and Regulation (CRD 4).
The report highlights the outcome of measures undertaken in the current implementation of the EBA recommendation on the creation of temporary capital buffers to restore market confidence (see Daily News 12 December 2011), which include:
• the increase in banks’ capital has been achieved mainly through new capital measures including by banks retaining earnings, introducing new equity and or managing existing liabilities;
• state assistance, and in some cases EU and/or international assistance, has been provided (or will be by the end of 2012) for banks that do not meet the current EBA recommendations; and
• capital strengthening has not led directly to a significant reduction in lending into the real economy.
Together with the report, the EBA has published additional data provided by the banks from their 30 June 2012 financial statements, including their capital composition, risk weighted assets, and sovereign exposures as of December 2011 and June 2012.
The EBA also indicated their intention to adopt new recommendations on capital conservation once the CRD 4 texts are finalised. This will include a requirement for banks to maintain an absolute amount of core tier one capital equivalent to 9 per cent of the core tier one ratio at the end of June 2012 under the current EBA recommendations, although banks may be allowed to go below this amount in specified cases, such as in the event of re-structuring or de-risking.
Copies of the report; questions and answers; press release; and summary are available.

Copies of the report;　questions and answers; press release; and summary are available