EUROZONE 1 COUNTRIES

JOSE MANUEL BARROSO : THE MAGICIAN OF THE EUROPEAN BANKING SYSTEM ?

 

TOP LEADING EUROPEAN BANKS ARE URGED  TO  RAISE NEW CAPITAL TO MEET COMPULSORY DEMANDS FROM THE EUROPEAN UNION FOR HIGHER CAPITAL RATIOS.

TOP BANKERS SAY CAPITAL PUSH IS TOO EXPENSIVE AND  BELIEVE THE TIMING IS NOT GOOD  AS THE AVERAGE EUROPEAN BANK’S EQUITY IS TRADING AT ONLY ABOUT 60 PER CENT OF ITS BOOK VALUE.

RAISING CAPITAL  AT THESE DEPRESSED  SHARE PRICE LEVELS IS NOT REGARDED AS A GREAT IDEA BY THE BANKING COMMUNITY.

ALSO, MOST BANKERS  SAY IT WOULD BE  FUNDAMENTALLY WRONG  TO INCREASE CAPITAL AT THIS POINT IN TIME AS IT WOULD THREATEN A FURTHER CONTRACTION OF CREDIT TO THE ENFEEBLED EUROPEAN ECONOMY.

ON OCTOBER 12, 2011, JOSE MANUEL BARROSO, EUROPEAN COMMISSION PRESIDENT, OUTLINED A COMPULSORY RECAPITALISATION FOR EUROPE’S LEADING BANKS REQUIRING « A TEMPORARILY HIGHER CAPITAL RATIO », WITH RESTRICTIONS ON DIVIDENDS AND BANKER BONUS PAYMENTS IN THE INTERIM ».

A 9% RATIO OF CORE TIER ONE CAPITAL TO RISK WEIGHTED ASSETS FOR BANKS ACROSS THE CONTINENT IS NOW REQUIRED BY  THE EUROPEAN BANKING AUTHORITY.

A DEADLINE OF 6 TO 9 MONTHS WOULD BE SET FOR FORCEABLE  RECAPITALIZATION BY GOVERNMENTS.

FRANCE IS READY TO GIVE BANKS PUBLIC CAPITAL.

FINE BUT WHO IS GOING TO PAY FOR IT ?…

TIME HAS COME TO BRING COMPREHENSIVE SOLUTIONS.

PHLDUCX

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