Euro debt plan may hit Ulster Bank owner hard Foreign-owned banks will shrivel
By LOUISE McBRIDE
Sunday October 16 2011
Europe's plans to resolve its massive debt crisis -- which includes a major capital revamp of its banks -- could leave the British bank, [broken link removed] (RBS), with a capital shortfall of almost €20bn, according to a Credit Suisse note circulated last week.
The note also said that the new round of bank [COLOR=#009900 !important]stress[/COLOR] tests -- which are at the heart of the upcoming recapitalisation of the European banks -- could turn RBS into one of the most vulnerable banks in Europe.
The [broken link removed] banking regulator, the European Banking Authority, will unveil details of its plans to recapitalise Europe's banks at an EU summit this Sunday.
Banks face capital requirements of as high as nine per cent under the new rules. About two-thirds of Europe's biggest banks could fail the new stress tests, according to Credit Suisse.
The recapitalisation could make the European banks more reluctant to lend money, according to Brian Devine, chief economist with NCB.
"European banks won't do much lending if they're deleveraging," said Devine.
Foreign-owned Irish banks could take the brunt of any retrenchment initiated by their parents on the back of the European bank recapitalisation plan.