Shrink assets or raise capital? -EU bank interactive tool

LONDON Fri Dec 9, 2011 9:18am EST

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LONDON Dec 9 (Reuters) - Europe's banks could shrink their risk-weighted assets by almost 1 trillion euros ($1.3 trillion) to meet the regulator's demand they are strong enough to withstand the euro zone debt crisis, according to Reuters calculations.

If the 71 banks tested had to hold minimum core capital of 10 percent -- above the 9 percent level set by the regulator -- they would need to raise 180 billion euros in equity, or deleverage by 1.5 trillion euros.

The following is an interactive tool to move the minimum capital ratio and shift whether banks meet the shortfall by raising equity or shrinking their assets.

The European Banking Authority has said deleveraging not already announced will not be allowed to count towards the capital rebuild, but it is up to national authorities to monitor and analysts say there remains a risk of excessive deleveraging.

Banks have a variety of other options, including selling assets, liability management, and cutting dividends or pay.

The tool excludes Greece's banks, which have been told they need 30 billion euros of extra capital, which is being provided under an international aid package.

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