German Bank Association Opposes Higher Capital Requirements

Discussion in 'Wall St. News' started by ASusilovic, Oct 13, 2011.

  1. FRANKFURT (Dow Jones)--The German private banking association (BdB) said Wednesday it is opposed to demands by European Commission President Jose Manuel Barroso that European Union banks should temporarily increase their equity capital.

    "The banking association views these calls as inappropriate as they don't tackle the causes of the current sovereign debt crisis," Michael Kemmer, head of the BdB said.

    His comments come after Barroso told the European parliament that the region "must urgently strengthen the banks." He said EU member governments, the European Central Bank and the European Commission must coordinate efforts to recapitalize banks through private and state injections, provide full transparency on sovereign debt exposure at all systemically important bank and introduce temporary, higher capital requirements after accounting for those government bond holdings.

    Banks falling short of capital under the measures should be barred by regulators from paying dividends or employee bonuses, Barroso said.

    Kemmer countered that banks have already beefed up their equity capital and therefore are more robust than before. A new stress test, calculating capital shortfalls by assuming arbitrary capital requirements would not produce serious results. Potentially forced recapitalization measures would unsettle market participants because of unresolved legal questions, he said.

    Banning banks that need fresh capital from paying dividends could be counterproductive as it complicates their ability to tap markets for fresh capital, Kemmer added.

    -By Eyk Henning, Dow Jones Newswires, +49 69 29 725 108,

    "We don´t need to raise capital" I heard this story before the Lehman crisis...
  2. dtan1e


    yes, it is sickening