EUROPE’S banking regulator said there were no plans to force more than a dozen weaker mid-tier banks – including Marfin Popular Bank — to raise capital quickly, saying an original timetable remained in place despite pressure building for action.
The Financial Times said on Thursday that European officials were set to speed up plans to recapitalise 16 banks that came close to failing this year’s pan-EU stress tests, citing European officials.
But the European Banking Authority (EBA) said a call on Wednesday from the Europe’s super-watchdog, the European Systemic Risk Board, for a coordinated action to strengthen banks’ capital position chimed with the recommendation issued by the EBA in July after the stress test.
The EBA gave those banks until April 2012 to implement plans to shore up their capital.
“The time frame for assessing these actions and monitoring their implementation is also in the recommendation. There are no changes to that time line,” a spokeswoman for the EBA said.
Nine banks failed the EBA test in July and were told to raise more capital by the end of December.
The EBA also said banks which only narrowly passed the stress test – with a capital ratio of only just above the 5.0 per cent pass mark after a two-year recession scenario – and with significant exposure to sovereign debt in troubled eurozone countries should take action to strengthen their capital health.
Marfin Popular passed the stress test with 5.3 per cent.
The banks must tell their national supervisors by the end of October what steps they will take to beef up capital cushions.
Financial portal Stockwatch reported that Marfin has denied being asked to intensify efforts to bolster its reserves.
The bank said it already plans to issue bonds worth €735 million — to replace maturing bonds – that will count as core tier 1 capital.
The EBA will assess those steps and monitor implementation and publish a report on what has been done.
The “near pass” banks are mostly mid-tier lenders. Seven are Spanish, there are two each from Germany, Greece – Piraeus and Hellenic Postbank – and Portugal, and there is one each from Italy, Cyprus and Slovenia.
Pressure is mounting on Europe’s politicians to bolster the strength of banks, who could face big losses on sovereign bonds if the euro zone’s debt crisis deepens.
Banks are expected to try to raise capital privately and governments would step in if needed.
Europe’s planned new safety fund, the EFSF, could be used, but it would only logically be needed by those governments that can only get finance at a high cost in the market.
