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.
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