European Union regulators have decided to give large eurozone banks up to four years to raise capital buffers, a source told Reuters on Tuesday, setting for the first time binding requirements that some lenders might find difficult to meet.
Under new rules meant to reduce taxpayers' costs in a banking crisis, eurozone banks will have to issue a sufficient amount of debt that would be written down, or bailed-in, to absorb losses if they fail.
These buffers had so far not been specified, giving banks more time to cover the new financing needs, which have been estimated between €186 billion and €276 billion - a daring task for a sector hit by a drop in confidence after hundreds of billions of euros were spent by governments to bail out lenders during the 2009-2013 eurozone crisis.
But EU regulators have now imposed binding targets for "35-40 large banks", a source familiar with the proceedings said, without naming the lenders concerned by the decision.
This is like to force banks to pay higher interest rates on their debt. Finding creditors will also not be easy as small investors got their bond savings burnt in recent rescues of banks in Italy or Portugal.
The write-down of bonds...
