German banks' new capital needs double to 13.1 bn euros

8th December 2011, Comments 0 comments

The European Banking Authority calculates that German banks need to raise twice as much in additional capital as first thought to withstand future financial shocks, official data showed Thursday.

The EBA calculated that German banks need to raise an additional 13.1 billion euros ($17 billion) in new capital, according to data made available by the Bundesbank.

That is more than twice the amount the EU's London-based financial regulator had estimated in so-called banking stress tests at the end of October.

Among Germany's major banks, the biggest, Deutsche Bank, would need 3.2 billion euros in additional capital, the EBA calculated, up from the October estimate of 2.8 billion euros.

And the country's second-biggest bank, Commerzbank, would need 5.3 billion euros, much more than the previous estimate of 2.9 billion euros.

The German banking federation BdB slammed the EBA's findings as "arbitrary", claiming the stress tests "have not contributed to a stabilisation of the markets."

In fact, "the opposite is true," the federation said.

"It is incomprehensible that an arbitrary requirement for a core capital ratio of 9.0 percent is laid down, while at the same time the risks from European sovereign bonds are taken into account," BdB chief Michael Kemmer said.

The results had only served to fuel further tensions on the markets even more and "negative consequences cannot be ruled out, even for economic growth as a whole," he said.

German banks had massively ramped up their capital provisions in recent years and "are anything but under-capitalised," Kemmer said.

© 2011 AFP

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