AIB and Bank of Ireland are among a number of European banks that need to raise a combined $78 billion in additional capital, according to JPMorgan Chase analysts.
European banks may need to raise $38 billion to buy back stakes that are owned by governments and an additional $40 billion to meet stricter capital requirements, analysts Kian Abouhossein and Cormac Leech said in a note to clients today.
Leaders of the Group of 20 countries last month agreed to develop rules to require banks to hold more and better-quality capital and cap leverage. Regulators may demand banks have a minimum core tier 1 capital ratio, a measure of financial strength, of 8 percent, JPMorgan said.
Commerzbank, Germany's second-largest bank, has the highest capital deficit at $17 billion, the analysts said. AIB and Bank of Ireland may have to raise $10 billion and $7 billion respectively, while Societe Generale, France's second-largest bank, needs $6 billion in additional capital, they said.
Intesa Sanpaolo, Banca Monte dei Paschi di Siena and Deutsche Bank have capital deficits of about $5 billion each, the analysts estimated. By contrast, HSBC Holdings, UBS AG and Credit Suisse Group have the highest amounts of excess capital, according to the analysts'calculations.
The total capital deficit of $78 billion excludes $67 billion that Royal Bank of Scotland Group and Lloyds Banking Group would together need to raise if they dropped out of the British government's Asset Protection Scheme, the analysts said.
"Given the magnitude of these capital needs, we believe a complete withdrawal of the APS is highly unlikely," they said.
Bloomberg