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UPDATE 1-Muenchener Hyp boosts capital after missing bank health-check target
July 15, 2014 / 12:50 PM / in 3 years

UPDATE 1-Muenchener Hyp boosts capital after missing bank health-check target

* Muenchener Hyp raises 400 million in capital

* Step bumps capital ratio to 11.1 from 6.3 percent

* Banks have bolstered capital by 97bln euros since 2013-ECB (Adds ECB comment, background)

FRANKFURT, July 15 (Reuters) - German cooperative mortgage lender Muenchener Hypothekenbank has raised 400 million euros ($545.6 million) from its owners to meet capital levels required by the European Central Bank.

The money, which Muenchener raised in the first six months of the year, will increase the bank’s capital ratio to 11.1 percent from 6.3 percent at the end of 2013, it said on Tuesday.

The ECB is carrying out a detailed review of the euro zone’s 128 largest banks before it becomes the region’s financial supervisor in November. It has asked banks to have a capital ratio of at least 8 percent as of December 2013.

Muenchener Hyp is the first German bank to report an end-2013 capital shortfall, but a number of other banks also raised capital when it became clear that they would not meet the 8 percent threshold for the ECB review.

In Italy, for example, Monte Paschi, Popolare Milano, Carige, Popolare Sondrio and Veneto Banca have taken such steps.

The new capital for Muenchener Hyp stems mostly from other banks and companies of the cooperative sector, a spokesman for the Munich-based lender said. He added that the capital raising had been launched immediately after it became clear in October 2013 that the bank would be supervised by the ECB.

“Further capital commitments are there, but have not yet been booked. By the end of August we will show a capital ratio of about 12 percent,” he said.

Muenchener Hypothekenbank, which has a balance sheet total of 35 billion euros, making it one of the smallest lenders to be supervised by the ECB, this year expects to at least repeat its 2013 net profit of 7 million euros and is aiming to pay a dividend, the spokesman said.

Chief Executive Louis Hagen said: “We view the upcoming results of the stress test and the Asset Quality Review with confidence. I am certain that we are now well prepared to fully meet future supervisory requirements.”

The ECB said that since July 2013 banks have increased their capital buffers by 97 billion euros, including 46 billion in equity issuance, one-off provisions of 19 billion, issuance of so-called CoCo bonds worth 18 billion and capital gains from asset disposals of 13 billion since July 2013.

“Banks have done a lot to repair and boost their balance sheets ever since we announced the comprehensive assessment. This is encouraging and going in the right direction,” an ECB spokeswoman said.

$1 = 0.7331 Euros Reporting by Arno Schuetze; additional reporting by Andreas Kröner and Silvia Aloisi. Editing by Jane Merriman

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