STOCKS NEWS EUROPE-Banks would need 84 bln eur in "stress"
Europe's banks would need about 84 billion euros of extra capital if they were subjected to a "stressed" case used by U.S. regulators to assess the capital strength of its top banks, analysts at Credit Suisse estimate.
U.S. regulators told top banks on Thursday to raise almost $75 billion after conducting "stress tests" to prepare them for a deep recession this year and next. The base case assumes an average loss on loans of about 5 percent and a "stressed" case indicates an average 9.1 percent loss.
In the U.S. base case, the European bank sector would be loss making over 2009/10 but would have enough capital to avoid massive recapitalisations, Credit Suisse analysts say in a note.
They estimate the average equity Tier 1 ratio would fall to about 5.9 percent in 2010 under the U.S. base case -- compared to their current forecast of 7.2 percent -- and would fall to 3 percent under the "stressed" case, below the regulatory minimum. "This essentially indicates that the banks would require about 84 billion euros of additional capital," the note says.
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