03 October 2012

Bundesbank: German banks successfully complete EU-wide recapitalisation exercise

According to the joint press release from the Deutsche Bundesbank and the Federal Financial Supervisory Authority, after deduction of the "sovereign capital buffer", all 12 German institutions in the sample achieved the minimum core tier 1 capital ratio of 9 per cent as at 30 June, 2012.

According to the Recommendation issued by the European Banking Authority’s (EBA) regarding banks’ recapitalisation, participating institutions were to have a core tier 1 capital ratio less the sovereign capital buffer, expressed in terms of risk-weighted assets, of at least 9 per cent. The sovereign capital buffer is the capital buffer for fair value losses on exposures to member states of the European Economic Area. All German banks participating in the recapitalisation exercise achieved this capital ratio. Most of the institutions had a ratio of over 10 per cent. “The German institutions have thus even overcomplied with the strict targets set by the EBA, which are well above the current legal minimum capital requirements”, explained Sabine Lautenschläger, Deputy President of the Deutsche Bundesbank.

Together with national supervisory authorities, the EBA established the participating institutions’ progress in achieving the required core tier 1 capital ratio as at 30 September 2011. Five German banks were found to require €12.9 billion in recapitalisation. “It is a positive sign that the capital shortfall was largely closed thanks to capital injections”, emphasised Raimund Röseler, head of banking supervision at BaFin. Over 80 per cent (€10.3 billion) of this shortfall was closed by strengthening core tier 1 capital, e.g. through retained earnings, capital increases or hardening undisclosed deposits or converting undisclosed reserves to disclosed reserves. The institutions also reduced riskier portfolios.  These measures improved the average capital ratio of the 12 participating institutions from 9.7 per cent (as at 30 September 2011) by one percentage point to 10.7 per cent (as at 30 June 2012); no institution had a capital ratio of less than 9.5 per cent.

Press release

© Deutsche Bundesbank