The latest calculation for the capital requirement mandated by the European Banking Authority (EBA) has singled out some unexpected institutions. Surprising to the majority of experts in the sector, the most affected lenders are from German, and the most seriously effected is Commerzbank.
Yesterday the EU offered figures that are up to date as of September. In total Commerzbank require 114.7 billion euros to elevate their capital ratio to 9% after applying a devaluing stemming from a portfolio of peripheral sovereign debt and federal administration credits.
The amount is eight billion euros greater than what was quoted in October, which was a provisional amount based on numbers from last June.
The five biggest Spanish banks are maintaining deficits that are more or less flat, with a light rebound of 10 million euros. Santander, BBVA, Bankia, La Caixa and Popular will have to raise 26.17 billion euros before the end of the next quarter.
But if we factor in the more than 9 billion euros in convertible bonds, this amount drops to 15 billion. While La Caixa has maintained flat capital requirements of 730 million and BBVA lowered theirs to 758 million, the three other firms has seen their requirements rise slightly.
Banco Santander now needs 15.302, but if convertible bonds are factored in, the banks need just another 5.224 billion euros. Through various deals such as selling off subsidiaries and issuing debt, it has already covered practically 80% of its shortfall.
BBVA best off
BBVA has benefited the most from the stress tests, considering that it has lowered its deficit to 6.329 million euros. With bond to share conversions, the lender has covered 55% of its shortages. As its competitors did, the rest of the capital came from improved management and optimized risk models and expected profit generation.
