* EBA won't release capital needs Weds, likely next week
* Delay comes as EU finance ministers discuss euro zone plan
* Capital, funding strains build on banks
* Commerzbank may shift property arm to state
* SocGen selling 600 mln eur of property loans
By Huw Jones and Jonathan Gould
LONDON/FRANKFURT, Nov 29 Europe's banking
watchdog has delayed telling individual lenders how much capital
they must raise to safeguard their survival until EU finance
ministers can agree on broader plans to shore up confidence in
the financial system.
The delay is a blow to banks and investors keen to get to
grips with how much cash is needed as the bank sector faces
multiple risks that threaten to spill over to the real economy.
The European Banking Authority (EBA) had planned to finalise
by Wednesday how much cash banks need to meet a minimum 9
percent core capital -- a preliminary estimate had put it at 106
billion euros ($141.5 billion) for the 70 lenders under
But European Union finance ministers (Ecofin) meeting to
discuss the euro zone debt crisis need to help banks as part of
a wider plan. If they agree on the bank measures, the EBA is
likely to release details next week, a spokeswoman for the EBA
The euro zone crisis has shown how closely banks are tied to
the health of their country, which continues to hurt Greece's
lenders. Some 13-14 billion euros of deposits left Greek banks
in September-October, and the outflows continued in the first 10
days of November, the country's central bank chief said.
Cyprus's largest lender, Bank of Cyprus also showed
the risk of sovereign troubles spilling over borders, as it
slumped to a loss after losing 1 billion euros on its holdings
of Greek government bonds.
Banks are under pressure from worries about
sovereign health, capital and liquidity, analysts said.
"For the funding markets to reopen, banks need a minimum of
160 billion euros (more capital) in a mild recession and 215
billion in a stress scenario," said Kian Abouhossein, analyst at
If the credit market doesn't reopen, he said banks could
face a "systemic problem" as they need to refinance 680 billion
euros of debt next year. "We see funding as one of the key
challenges in 2012," he said.
The European bank sector was down 0.1 percent by
1700 GMT, languishing not far from a more than 2-1/2 year low
set last week.
Banks across Europe are stepping up plans to shrink balance
sheets in the face of these difficulties, prompting Portugal's
banking regulator to warn its banks to shrink slowly to limit
damage to its fragile economy.
Germany's Commerzbank may shift bad assets from
its loss-making property arm Eurohypo to the German
state, sources close to the bank told Reuters.
The move could allow it to avoid a potentially punitive
fresh state-aid inquiry by the European Commission. It has been
ordered by the Commission to sell Eurohypo by the end of 2014 as
a condition for approving state aid in 2008/09.
France's Societe Generale is selling property
loans worth more than 600 million euros ($801 million) as it
seeks to slash its exposure to the volatile sector and bolster
its balance sheet, a person close to the situation said.
Rivals BNP Paribas and Credit Agricole
and banks in Italy, Spain, Germany, Britain and Ireland are also
deleveraging aggressively to meet tougher capital rules and ease
That could put more pressure on sovereign debt or squeeze
lending to the economy, according to a report prepared for the
"There are serious concerns about a possible inappropriate
deleveraging by banks when implementing the measures that would
prejudice an adequate supply of lending to the real economy or
put excessive additional pressure on sovereign debt," officials
wrote in the report seen by Reuters.
Sweden's central bank told its lenders to adopt tougher
global rules on liquidity ahead of the deadline, ratcheting up
pressure on the sector just days after introducing tougher
capital requirements than European rivals.
The Riksbank said Swedish banks should speed up changes to
short-term liquidity and the way they fund themselves in the
longer term so that their assets and liabilities match better.
The EBA said it had made progress in finalising its
recapitalisation plan, but it was part of a broader package also
including improving long-term funding and dealing with losses on
Greece's debt. Funding appears to be the sticking point for
A public guarantee scheme was considered to support banks'
access to term funding, but there were objections to a pooled
guarantee and now national guarantees are on the cards.
The EBA is also due to publish guidelines for banks that
want to issue hybrid debt known as contingent capital to help
fill any capital shortfall.