Germany's banks will have to find 9.6 billion euros to meet a European Union capital target by mid-2012, banking and regulatory sources said on Friday. The European Banking Authority, sifting the results of a second stress test of 70 banks in the EU, is expected to announce next week the amount of capital each must raise along with guidelines for doing so.
Earlier rough estimates set the total at 106 billion euros. So far, the EBA, which was not immediately available for comment, has stuck to its 9 percent capital target and mid-2012 deadline for achieving it, despite pressure from banks to be more lenient. Publication of the new requirements will come just ahead of what is seen as a make-or-break EU summit which could finally bring progress in tackling the euro zone's sovereign debt crisis and take some of the pressure off banks.
Meanwhile banks continue to sell off non-core assets to comply with the 9 percent core Tier 1 capital ratio target agreed by EU finance ministers: Royal Bank of Scotland, 83 percent owned by the UK government after its bailout in the financial crisis, sold its tenanted pub business to Dutch brewer Heineken for 422 million pounds ($661.8 million). Banks have been lobbying hard to scale back how much capital they will be required to raise. The industry says it cannot plug large gaps and keep lending to an already ailing economy.
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