Finanstilsynet supports the EBA's plan for recapitalisation of European banks
Published: 8 December 2011
Last updated: 11 February 2020
Document number: 45/2011
The European Banking Authority (EBA) today published a recommendation, and final figures, related to banks' recapitalisation needs based on new, higher requirements. This is done to maintain stability and confidence in the markets.
The formal recommendation calls for national supervisory authorities to require the banks included in the capital needs survey to strengthen their capital position is by building up temporary capital buffers. In light of substantially increased systemic risk, banks will be required to hold a minimum of 9% Core Tier 1 capital by the end of June 2012. In addition, capital reserves must be established that make full allowance for possible losses on government exposures at current market prices. Banks will be required to draw up plans for achieving the stipulated capital level, including any fresh capital to be raised. The plans will be subject to supervisors' approval. The recommendation expresses a clear expectation that banks will retain earnings and reduce bonus payments in order to reach the target set.
"Finanstilsynet supports the EBA's plan for bank recapitalisation and will see that it is followed through in Norway. Norwegian banks, finance companies and mortgage institutions are at the outset well capitalised and should not face problems meeting this capital requirement," says Finanstilsynet's Director General, Morten Baltzersen.
Finanstilsynet's position is that all banks, finance companies and mortgage institutions should hold at least 9% Core Tier 1 capital by the end of June next year. Any bank, finance company or mortgage institution with a lower level of capital, or a level of around 9%, will be monitored closely. A general deleveraging will not be allowed as a means of meeting the capital requirement. Institutions which form part of foreign financial conglomerates will be discussed and addressed in conjunction with foreign national supervisors.
DNB Bank has participated in the capital needs survey, and is EUR 1.52bn short of reaching 9% Core Tier 1 capital. The DNB Group announced upon publication of its preliminary results on 27 October that capital can be redeployed from the holding company to the banking group. A decision to take this step has now been adopted by the bank. The final figures do not differ significantly from the preliminary figures where DNB is concerned.