Some of the eurozone’s biggest banks will need to raise more equity because of a clampdown on national exceptions to capital rules, the eurozone’s chief banking supervisor has forecast.
Danièle Nouy told the Financial Times that banks would have to raise more and better quality capital as a result of her new agency’s drive to harmonise more than 150 national variances in capital rules. Fresh legislation from Brussels is likely to also be needed, she added.
“Some banks still have to get more capital,” Ms Nouy, a former French central banker appointed last year to head the European Central Bank’s Single Supervisory Mechanism, said in an interview on Tuesday.
“It’s not so much about how much [capital] it’s about the definition of capital. There are too many, in my view, national options in the definition of capital in Europe and we have to address that. [ . . .] We may have to go to the legislature, to the European Parliament, to ask for more harmonisation in regulation.”
Her comments follow capital-raisings by eurozone banks earlier this year. Banco Santander raised 7bn in an overnight share sale in January, which bankers said was in part to cope with increased capital demands from the SSM, although the Spanish bank denied this.
Eurozone banks have recently been given updated capital targets by the SSM, which call for them to strengthen their balance sheets based on the results of last year’s ECB stress tests and asset quality review.