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ECB asking top banks to hold 10.1% CET 1 capital on average

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Euro zone banks on the European Central Bank's direct watch will be required to hold a Common Equity Tier 1 capital equal to 10.1 per cent of their risk-weighted assets on average next year, an ECB executive board member said on Tuesday.

[FRANKFURT] Euro zone banks on the European Central Bank's direct watch will be required to hold a Common Equity Tier 1 capital equal to 10.1 per cent of their risk-weighted assets on average next year, an ECB executive board member said on Tuesday.

Individual big banks may, however, have vastly different standards depending on their balance sheets, with requirements ranging from 8 per cent to about 14 per cent, Sabine Lautenschlaeger told a business conference.

The ECB is asking the 122 banks it supervises to increase their average pillar 2 capital by around 30 basis points as part of its Supervisory Review and Evaluation Process. This rises to 50 basis points for globally significant institutions, which have to hold a further buffers.

It earlier said that all but just a few banks already meet the new requirements and the rest are working on plans to raise capital.

REUTERS