Europe's largest banks will need to find an extra 70.4 billion euros ($95 billion) of capital to comply with the tough banking rules due to be implemented in 2019, according to a report by the region's banking regulator.
But the European Union's (EU) 42 leading lenders are on track to meet the capital requirements of Basel III – a set of banking reform measures - ahead of schedule, the European Banking Authority (EBA) said on Wednesday.
The 70.4 billion euros shortfall as of December last year was 29.1 billion less than the deficit recorded six months earlier, as banks stump up their capital reserves.
(Read more: Banking union: Europe clears critical hurdle)
"This reduction in the… capital shortfall partly reflects the continuous efforts by European banks following the EBA recapitalization exercise," the watchdog said in the report.
Basel III, which is due to come into effect at the start of January 2019, aims to strengthen the banking industry following the financial crisis of 2008 which saw a number of big banks – such as Lehman Brothers – collapse. Many others received state aid after being deemed "too big to fail" – meaning that if they went under they would significantly damage the wider banking industry and economy.
Under the rules, banks are required to have a capital buffer of at least 7 percent of their assets on a risk-weighted basis to protect them from further financial and economic shocks. They must also have enough liquid assets to survive market upsets of up to 30 days, known as the liquidity coverage ratio.