Europe's shrinking banks still critical on global stage
LONDON/FRANKFURT (Reuters) - European banks will dominate the group of lenders required to hold extra capital to protect the global financial system, despite moves to shrink their businesses in response to the region's debt crisis.
The Financial Stability Board, a taskforce for the world's 20 top economies (G20), on Thursday revised its list of "systemically important" banks considered so large and complex they need an extra buffer to absorb potential losses.
The FSB's aim is to ensure that these banks hold enough reserves so governments won't have to rescue them in future crises.
Sixteen of the banks are from Europe which accounts for about half of global banking assets. Eight are from the United States, and four are from Asia. The FSB will next update the list in November 2013.
Spain's BBVA (BBVA.MC) and London-based Standard Chartered (STAN.L) entered the list for the first time as a trio of European banks that have retreated to their domestic markets, Commerzbank (CBKG.DE), Lloyds (LLOY.L) and Dexia (DEXI.BR), dropped out.
Europe's debt crisis has resulted in a drop in the value of government bonds which are traditionally the ballast held by banks in the region. Spanish bonds have been particularly badly hit.
Banks across the region have been shrinking their balance sheets, such as by selling off risky assets, to raise their capital ratios without having to ask unwilling investors for money.
The FSB's capital surcharges, being phased in over three years from 2016, will come on top of the minimum requirement of 7 percent all banks must have under the global Basel III accord being phased in from January over six years.
Analysts said most banks already meet or exceed the requirements. " Local rules, such as in Britain and Switzerland, already trump these. The Dutch and Swedish are also higher," one analyst said.
BBVA and Standard Chartered will be required to have a total core ratio of 8 percent, for example. The Spanish bank is already at 10.8 percent, while Standard Chartered hit 11.6 percent in June.
"It makes sense for us to be on the list because we are a true international institution," a BBVA spokesman said.
Standard Chartered had no comment.
Deutsche Bank (DBKGn.DE) signaled it was well prepared for the new rules after noting in September it would strive for a core ratio in excess of 10 percent by 2015.
(Additional reporting by Steve Slater in London, Philipp Halstrick in Frankfurt and Sonya Dowsett in Madrid; Editing by Alexander Smith and Erica Billingham)
- Tweet this
- Share this
- Digg this
- One dead, one wounded in shooting in Chicago financial district
- Israel, Palestinians locked in vicious circle of Gaza wars
- U.S. says hopeful of WTO deal with India only hours before deadline
- UPDATE 2-Bombardier plans more job cuts, Russia plans intact
- Netanyahu vows to complete Gaza tunnels destruction
The United States said on Thursday it was hopeful that differences between India and much of the rest of the world over a major trade agreement could be resolved in time, with only hours remaining before the deal has to be signed. Full Article
ONGC, Oil India bid $1.5 bln for stake in Murphy Oil's Malaysia assets - sources Full Article