Bloomberg News

EBA to Review 9% Capital Buffer Based on Steps to Fight Crisis

January 12, 2012

Jan. 11 (Bloomberg) -- The European Banking Authority will review banks’ need to hold a 9 percent capital buffer as governments take steps to address the sovereign debt crisis, Andrea Enria, the EBA’s chairman, said in a speech.

The “need to maintain this buffer, and its size, will be reviewed if and when the policy measures to fight the sovereign debt crisis have an effect on the price of government bonds,” Enria said in Rome today.

The EBA told banks last month to raise 114.7 billion euros ($145.8 billion) in fresh capital by the end of June as part of measures introduced to respond to the euro area’s sovereign-debt crisis. Lenders should look to bolster reserves by cutting bonuses, retaining earnings or issuing shares, it said.

The EBA has “underlined the need to accompany these measures with efficient and credible policy solutions on sovereign debt,” Enria said.

German banks need to raise an additional 13.1 billion euros, Italian banks 15.4 billion euros, and Spanish lenders 26.2 billion euros in core tier 1 capital, the European Banking Authority in London said. The capital shortfalls include 15.3 billion euros for Spain’s Banco Santander SA and 7.97 billion euros for Italy’s UniCredit SpA.

Unicredit’s shares plunged 45 percent in the four days following the announcement of a rights offer for new shares at a discounted price of 1.943 euros apiece. The offering, which runs through Jan. 27, was guaranteed by a group of 26 underwriters, led by Bank of America Corp. and Mediobanca SpA, which have agreed to buy any leftover stock.

--Editors: Anthony Aarons, Peter Chapman

To contact the reporters on this story: Ben Moshinsky in London at

To contact the editors responsible for this story: Anthony Aarons at

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