The European Banking Authority (EBA) estimates that European banks will have to raise €24.5 billion in additional equity, including €6 billion in optimum-quality capital (CET 1), to comply fully with the 'Basel III' prudential framework up to 2027, according to two interim reports published on Thursday 4 October (see EUROPE 11921).
On the basis of data available at the end of 2017, minimum optimum quality bank capital requirements will increase by 16.7% when the 'Basel III' framework enters fully into force.
These extra requirements may be as high as 18.7% for the 38 banks of the panel with CET 1 capital of more than €3 billion (group 1), but only 6.8% for the 68 other banks of the panel (group 2).
As regards the liquidity ratio, the European authority notes that at the end of 2017, the average ratio of European banks was 145% and the average gross deficit observed stood at €20.8 billion, corresponding to four banks monetising their liquidity buffers during times of stress on the market.
Banks tend to hold lower liquidity buffers in some foreign currencies, in particular the US dollar, the EBA notes. (Original version in French by Mathieu Bion)