Minister believes German banks able to meet capital needs

9th December 2011, Comments 0 comments

German Finance Minister Wolfgang Schaeuble believes German banks will all be able to meet the stiffer capital requirements laid down by the European Banking Authority under their own steam, his spokesman said on Friday.

"For those that need to, the different banks will be able to meet the requirements," Martin Cotthaus told a regular press briefing, saying the minister welcomed the publication of the results of the EBA's stress tests the day before.

On Thursday, the EU's London-based financial regulator calculated that German banks need to raise twice as much in additional capital as first thought to withstand future financial shocks.

According to the EBA's calculations, German banks need an additional 13.1 billion euros ($17 billion) in new funds to meet tighter core capital requirements, with Deutsche Bank, the country's biggest, needing 3.2 billion euros and Commerzbank, the number two, needing 5.3 billion euros alone.

Analysts and investors had in particular been speculating about whether Commerzbank would be in a position to raise the capital under its own steam or require state funding after it already had to be bailed out in the 2008-2009 financial crisis and is now 25-percent in state hands.

The EBA's findings have angered the German banking sector, with the BdB banking federation saying the stiffer core capital ratio of 9.0 percent was "arbitrary" and would only exacerbate the crisis by fuelling market tensions.

German banks have massively ramped up their capital provisions in recent years and are anything but under-capitalised, the federation insists.

© 2011 AFP

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