EU Banks To Cut 3.2 Trillion to Comply with Basel III

Europe’s biggest banks will have to cut €661 billion ($882 billion) of assets and generate €47 billion ($63 billion) of fresh capital over the next five years to comply with forthcoming regulations aimed at reducing the likelihood of another taxpayer funded bailout.

The figures form part of an analysis by the UK’s Royal Bank of Scotland – which singles out Deutsche Bank, Crédit Agricole and Barclays as the banks most in need of fresh capital – highlighting that five years on since the financial crisis, Europe’s banks are still ‘too big to fail.’

Overall the region’s banks need to shed €3.2 trillion ($4.3 trillion) in assets by 2018 to comply with Basel III regulations on capital and leverage, according to RBS.

The burden is greatest on smaller banks, which need to shed €2.6 trillion ($3.5 trillion) from their balance sheets, raising fears that lending to the region’s small and medium size enterprises will be sharply reduced as a result.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza