No plans for extra euro zone bank capital support-sources
Baku, September 7 (AZERTAC). Euro zone governments have no plans to inject any further capital into banks over and above the money earmarked for the financial sector in the emergency loan programmes to Greece, Ireland and Portugal, sources said.
Euro zone officials discussed the issue of banking sector recapitalization on Monday and Tuesday as part of the preparations for the informal meeting of European Union finance ministers in Poland on Sept. 16.
The issue has returned to the table after the IMF called for additional capital to boost the European banking sector, estimating the extra need at 200 billion euros in a draft version of an unpublished report leaked to the press.
"We have discussed this with the IMF in detail and the IMF has agreed that this initial figure will be revised downwards and the revision will be quite substantial," a euro zone official participating in the talks said.
"There is a need for additional capital in the European banking system but the magnitude of the required recapitalization is nowhere near the initial number of the IMF," the official said.
Euro zone officials estimate banks have in total already raised some 50 billion euros in additional capital in the run up to the European bank stress tests in July and now had between six and nine months to further increase it where necessary.
"In all likelihood it will be private capital that will be raised. For public money, we have no plans of a large scale or any banking recapitalization programme over and above the contingency reserve for the financial sector in the three programmes that we are currently running," the official said.
The capital needs could also be solved through mergers and acquisitions. Only at the end of the six to nine months, if the identified banks will have failed to have sufficient capital, would governments step in with public money, a second euro zone official said.
The euro zone has earmarked 10 billion euros to help banks in Greece, 35 billion for Ireland and 12 billion for Portugal under the euro zone bailout programmes.
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