Will the European banking capital hole really be filled?
Finally we’ve got some hard numbers from the Europeans on the hole in the banking sector. This has been posted on the European Banking Authority website, showing how much the banking sector of each country will need to raise by next June:
So according to the EBA, French banks need to raise 8.8bn euros to reach a 9 per capital ratio. German banks need 5.2bn euros. It’s 26bn euros for the Spanish banks. Italian banks need 14.8bn euros. The combined total is 106bn euros.
Those figures are very low compared to the estimates of others of the size of the euro bank capital hole. The IMF put the size of the hole at 200bn. And here’s the estimates from the analysts at Societe Generale by country:
It’s not hard to spot some major differences, particularly on France, Germany and Italy (although Spain seems to have to raise more than expected). Now we wait to see if the capital markets are impressed with the EBA’s calculations. The crucial question is whether the banks’ cost of short-term borrowing goes down.Tagged in: banks, EBA, europe
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