European Banking Authority Announces Final Capital Requirement For European Banks

The European Banking Authority (EBA) has announced the size of the capital buffers European banks should have next summer. The new requirement may be calculated without the transition regulations, which means that Swedish banks no longer need to contribute new capital.

On 26 October 2011, the EU reached an agreement that European banks should increase their capital buffers by next summer. The EU requires that Europe’s largest banks, no later than 30 June 2012, shall have a common equity Tier 1 capital ratio totalling nine per cent after the revaluation of government bonds. 

The EBA announced today how much capital the European banks need to contribute. One new component in the recapitalisation exercise is that the calculation for Swedish banks is no longer based on the transition regulations from Basel 1, which means that Svenska Handelsbanken and Swedbank will no longer need to make capital contributions.

FI believes that the new calculation provides a more accurate representation of the Swedish banks’ resilience. The Swedish banks are some of the most well capitalised banks in Europe and, without the transition regulations, all of the major Swedish banks already fulfil the EBA’s requirement.