Official: EU banks have to raise $140 billion - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Official: EU banks have to raise $140 billion

Posted: Updated:
Greek Finance Minister Evangelos Venizelos, left, speaks with ECB President Jean-Claude Trichet during a meeting of EU finance ministers at the EU Council building in Brussels on Saturday, Oct. 22, 2011. Greek Finance Minister Evangelos Venizelos, left, speaks with ECB President Jean-Claude Trichet during a meeting of EU finance ministers at the EU Council building in Brussels on Saturday, Oct. 22, 2011.

BRUSSELS (AP) — EU finance ministers neared agreement Saturday on forcing banks to raise just over €100 billion ($140 billion) to make sure they have enough reserves to weather further losses on their Greek debt holdings and market turmoil, a European official said.

Finance ministers from the 17 nations that use the euro decided Friday that banks must take larger writedowns on their Greek bonds if Athens is ever to dig out from under its debts. A new report said Greece's debt load may need to be slashed up to 60 percent — as opposed to the 21 percent tentatively agreed to in July.

A negotiator from the eurozone has been asked to reopen discussions with banks.

The next step now is to shore up the banks ahead of those losses.

The European official said that EU leaders are expected to sign off Sunday on forcing the continent's biggest banks to raise €100 billion ($140 billion) in capital.

The official spoke on condition of anonymity because the discussions were still ongoing.

While higher than recent press reports have suggested, the recapitalization figure is likely to disappoint some analysts. A report by the International Monetary Fund has called for up to €200 billion ($280 billion) to be poured into banks.

The new rules would force systemically important banks to raise their core capital ratios to 9 percent, compared with just 5 percent to 6 percent they needed to pass EU stress tests this summer. The ratio measures the amount of capital that banks hold compared to their risky assets.

Strengthening banks and slashing Greece's debts are both critical to solving Europe's sovereign debt crisis, which is now threatening to engulf larger economies like Italy and Spain and is blamed for dampening growth across Europe and even the world.

"The crisis in the eurozone is doing real damage to many of the European economies, including Britain," George Osborne, Britain's chancellor of the exchequer, said as he headed into Saturday's meeting. "We have had enough of short-term measures, sticking plasters that get us through the next few weeks."

___

Elena Becatoros and Sarah DiLorenzo contributed to this report from Brussels.

 

Copyright 2011 The Associated Press.

Powered by Frankly
All content © Copyright 2000 - 2017 Midwest Television, Inc. All Rights Reserved.
For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.