One implication is that banks could use upcoming fourth quarter results to clear the decks, so that their balance sheets anticipate as far as possible the rules they expect the ECB to apply in its asset quality review. Banks like Barclays and Deutsche Bank have undergone sizable rights issues.īut the process is far from complete.

Already this year European banks have issued €60 billion of new equity, according to Thomson Reuters data, up from €30 billion in the whole of 2012. Rather than wait for the ECB, banks could try to get ahead. But banks could still have to raise €180 billion from new capital raising or restructuring, PwC reckons. Technical adjustments could reduce the gap by around €100 billion.

In sum, European banks could need to plug a €280 billion capital gap, according to a report by PwC. They also need to comply with minimum capital requirements under Basel III regulations and ensure they meet leverage ratio rules designed to make them less reliant on borrowed funds.

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