European banks will face a “substantial capital crunch” in 2014 thanks to new industry regulations, with capital shortfalls expected to be in the region of 280 billion euros ($380 billion), according to PricewaterhouseCoopers (PwC).
In a report labelled “De-leverage take 2,” PwC said banks’ capital reserves will face three pressures next year: the Basel III capital ratio requirements, leverage ratio requirements, and the European Central Bank’s (ECB’s) recent Comprehensive Assessment.
The company also warned that these challenges will be compounded by further regulation from individual countries. Unable to make up the capital shortfall by the traditional methods, banks will have to raise 180 billion euros ($244 billion) in new equity, PwC added.
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