FRANKFURT--Germany's banks were about 14 billion euros ($18
billion) short of meeting a key capital ratio under new banking
regulations at the end of 2012, German banking regulator BaFin said
Tuesday.
The banks, which include German giants Deutsche Bank AG (DBK.XE,
DB) and Commerzbank AG (CBK.XE, CRZBY), reduced their targeted
amount of capital needed by the end of 2012 by about EUR32 billion
but remained short of the target.
More recent data aren't yet available, but both Deutsche Bank
and Commerzbank launched capital increases in recent weeks, seeking
to raise more than EUR5 billion in capital.
Banks across Europe have been scrambling to improve their
balance sheets as regulators demand they come up with new capital
in an effort to boost confidence in the sector amid the debt crisis
in the euro zone. German banks have often been cited by industry
analysts as lagging behind the pack.
The regulations, known as Basel 3, are being phased in starting
this year, and banks must meet new key capital ratio to
risk-adjusted-asset targets, a measure of bank health. While the
regulations aren't fully phased in until 2019, most investors
expect banks to already have the needed capital in place.
In late 2011, European regulators identified an immediate
capital gap for German lenders of EUR13.1 billion, something the
banks successfully filled by June 2012.
The decrease in capital needs stems largely from cutting risk or
selling assets, as no major private German banks chose to issue
shares last year, and public-sector lenders are unable to do
so.
Separately, Ms. Konig warned that the process for setting the
benchmark lending rates, the London interbank offered rate and the
Euro interbank offered rate, are still exposed to manipulation
despite the introduction of certain security standards.
"In the mid-term, there is no way around establishing
alternatives [for calculating Libor, Euribor] which are, as far as
possible, based on actual transactions in liquid markets," Ms.
Konig said.
The German regulator has asked all the banks on the panels that
establish the rates to introduce minimum standards in a bank's
organizational set-up to prevent traders from rigging them.
The interbank lending rates affect private households and
companies as they serve as a proxy for all sorts of banking
products, ranging from swaps to mortgage loans.
Global banks stand accused of manipulating Libor, a scandal that
has ensnared at least 16 financial institutions. The British bank
Barclays last year paid more than $450 million to settle
allegations by U.S. and British authorities that its executives and
traders had rigged Libor.
Ms. Konig said the regulator so far hasn't found evidence for
German banks having manipulated benchmark rates systematically, but
added that the special audit hasn't concluded yet.
Write to Alexandra Edinger at Alexandra.Edinger@dowjones.com,
Eyk Henning at Eyk.Henning@dowjones.com and Laura Stevens at
Laura.Stevens@wsj.com
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