European banks warned to maintain capital levels

BANKS in the European Union must maintain capital levels they were told to reach a year ago or say how they will top up their buffers, the bloc’s banking watchdog said yesterday.

By The Newsroom

Published 23rd Jul 2013, 01:01 BST

The European Banking Authority (EBA) said it has extended a requirement it made in December 2011 for 61 banks to hold certain amounts of capital by June 2012.

Banks raised over E200bn to meet that deadline, but regulators are keen for lenders to maintain these cushions to help restore investor confidence in the sector. ”Preserving capital in European banks is essential for maintaining the flow of lending to the real economy,” EBA chairman Andrea Enria said in a statement yesterday.

The banks must update their supervisors by October 29 on their capital buffers. Banks whose buffers have fallen below the nominal amount that was set for them must present “credible plans” to restore their capital base. “When reviewing capital plans, national authorities should discuss and challenge banks’ assumptions and consider the potential impact of stress events,” EBA said.

European Union