The European Banking Authority (EBA) has revealed that “temporary” requirement for European banks to hold core tier one capital equivalent to 9% of risk-weighted assets will be made permanent.
EBA chairman Andrea Enria was quoted by Financial Times as saying that the key thing will be capital conservation.
"We don’t want the capital to be released. We want the banks maintaining this capital level and gradually moving to the Basel III full implementation. We will be asking the banks to develop capital plans to get there," Enria added.
Enria said that the banks whose losses corroded their capital buffers would not be required to lift up fresh capital immediately, but would need to have a plan to replenish the capital.
The six-year phase-in of Basel III global capital standards is set to begin next year and the entire effort is intended to mitigate any future financial crisis.
According to Enria, through market capital raisings, the EBA exercise and the Greek and Spanish bailouts, European banks will have been injected with over €240bn between the period 2011and 2012.