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UPDATE 1-European banks regulator corrects capital adequacy numbers
November 25, 2015 / 3:32 PM / 2 years ago

UPDATE 1-European banks regulator corrects capital adequacy numbers

(Adds detail on error)

By Sarah White

MADRID, Nov 25 (Reuters) - The European Banking Authority on Wednesday corrected some of the capital adequacy ratio numbers it published on European Union banks after shares in Spanish lenders took a hit.

The EBA is tasked with coordinating banking rules across the 28-country EU and was told of its mistake by banks and national supervisors shortly after the data was published at 1730 GMT on Tuesday.

It published a correction on Wednesday, saying the average core equity capital ratio to risk-weighted assets - when measured under the “fully-loaded” criteria which takes into account the application of all new capital requirement rules - was 12 percent, instead of the 11.8 percent published on Tuesday.

After a bruising financial crisis in 2007-09, banks are under pressure from investors and markets to demonstrate their core solvency, mainly through the level of their capital holdings.

The EBA lifted the average “fully-loaded” capital ratios attributed to banks in Austria, Italy, Portugal, Spain, Hungary and Slovenia.

In the original report Spanish banks appeared to have the lowest ratios, an average of 9 percent on a “fully-loaded” basis. This was later changed to 10 percent, above the average for Portuguese banks, which was changed from 9.3 percent to 9.6 percent.

Shares in Spain’s lenders had underperformed that of other European banks on Wednesday, partly due to their exposure to troubled Spanish energy firm Abengoa. But banks such as Santander pared back their losses slightly after the EBA correction.

The EBA said on its website on Wednesday morning that this particular ratio had been published for information only.

The clerical error was made by EBA itself when it used data certified by the banks and national supervisors to calculate “fully-loaded” capital figures.

Some items must be deducted from capital calculations as they are no longer counted as eligible under incoming rules but the EBA double-counted excess deductions at banks.

EBA is the body charged with ensuring that capital rules for banks, such as when and what sort of deductions must be made from capital, is done correctly and consistently across the EU.

The quality of the underlying data in the templates went through three rounds of checks and was not being questioned at all, an official close to the process said.

The error is embarrassing for the London-based EBA as it tries to maintain an influential role after the European Central Bank became the direct supervisor of top lenders in the 19-country euro zone last year. (Reporting by Sarah White in Madrid and Huw Jones in London; Editing by Greg Mahlich)

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