http://www.bloomberg.com/news/2011-06-06/european-banks-capital-shortfall-means-greece-debt-default-not-an-option.html
While estimates of the capital shortfall vary, the vulnerability of European banks to a sovereign shock isn’t disputed. Independent Credit View, a Swiss rating company that predicted Ireland’s banks would need another bailout last year, found in a study to be published tomorrow that 33 of Europe’s biggest banks would need $347 billion of additional capital by the end of 2012 to boost their tangible common equity to 10 percent, even before any sovereign default.
Concern that European lenders lack the reserves to weather losses on an estimated $136 billion in foreign claims on Greece’s government, banks and companies led Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest money manager, to say on May 31 that Europe is going to need a “giant TARP,” referring to the Troubled Asset Relief Program that the U.S. introduced to rescue financial firms.
While estimates of the capital shortfall vary, the vulnerability of European banks to a sovereign shock isn’t disputed. Independent Credit View, a Swiss rating company that predicted Ireland’s banks would need another bailout last year, found in a study to be published tomorrow that 33 of Europe’s biggest banks would need $347 billion of additional capital by the end of 2012 to boost their tangible common equity to 10 percent, even before any sovereign default.
Concern that European lenders lack the reserves to weather losses on an estimated $136 billion in foreign claims on Greece’s government, banks and companies led Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest money manager, to say on May 31 that Europe is going to need a “giant TARP,” referring to the Troubled Asset Relief Program that the U.S. introduced to rescue financial firms.
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