The European Banking Authority (EBA) said on Monday it was impressed with banks' willingness to take all the necessary measures to meet new capital requirements, refuting earlier press reports which claimed that the EU’s banking regulator would not accept the banks’ suggested changes.
“These reports purporting to contain factual information are in fact inaccurate and misleading. In particular, the overwhelming majority of measures outlined in the plans appear to be, in aggregate, in line with the spirit and the letter of the EBA's Recommendation,” the EBA said in a statement.
The Financial Times, citing three people familiar with the process, reported that the EBA would challenge “a significant proportion of the capital restructuring plans put forward by the continent’s leading banks”.
It added that according to one person close to the process, “as much as half of the measures outlined in those plans do not look credible”.
Under the new rules, banks will be required to have a so-called Core Tier 1 capital ratio, which measures the banks’ core equity against its total risk-weighted assets, of 9 percent by the end of June 2012.
That buffer is designed to provide a reassurance to markets about the banks’ ability to withstand future shocks.
The banks needed to submit their plans on how to achieve these new goals to national regulators last month.
“The EBA is still undertaking its review of the banks’ plans,”the regulator said, adding it was too early to comment on the feasibility of those plans.
“These measures will strengthen the resilience of the EU banking sector. They form part of a broader package agreed at the EU level to address the current situation by restoring stability and confidence in the markets,” the statement said.
The EBA will provide more information on the progress of the exercise after the meeting of its Board of Supervisors on February 8-9.