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The Bank for International Settlements (BIS)
said on Thursday the world's top 102 banks would have been 15.1
billion euro ($19.5 billion) short of capital to reach a 7
percent target for common equity at the end of December,
compared with an estimated shortfall of 57.5 billion euros six
months earlier.
This continues a sharp reduction in the theoretical capital
shortfall faced by banks, which was estimated at 374 billion
euros less than three years ago. The gap has narrowed as banks
have raised equity, held back more of their earnings, shed loans
and other assets and restructured their businesses.
The BIS has been monitoring how well banks are transitioning to
the implementation of tougher capital rules, which are being
phased in from 2013 to 2019, and releases its findings every six
months.
The banks in the sample made after-tax profits of 419 billion
euros prior to dividend payouts in 2013, BIS said.
Most of the capital shortfall would be at European banks.
Europe's top 42 banks would have been 11.6 billion euro short of
capital to reach the 7 percent target (which includes add-ons
that are applied for the biggest banks), down from a 36.3
billion shortfall six months earlier, the European Banking
Authority said.
The BIS said the common equity capital ratio, a measure of
capital strength, of the top global banks averaged 10.2 percent
of risk-weighted assets at the end of December, up from 9.5
percent at the end of June 2013.
It said the average leverage ratio - a simple measure of equity
to assets, without accounting for the riskiness of loans - was 5
percent for the 102 banks, but nine of the firms did not meet
the minimum leverage ratio requirement of 3 percent.
($1 = 0.7735 Euros)
(Reporting by Steve Slater; Editing by Nishant Kumar and Mark
Potter)
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