European banks will need €39.0 billion of additional total capital, of which €24.2 billion will be Tier 1 capital, to comply with final regulatory requirements fully taking effect starting 2027, according to the European Banking Authority.
Assuming full implementation of the Basel III reforms, banks' Tier 1 minimum required capital will increase by an average of 19.1%, based on data as of June 2018. The capital requirement of internationally active banks with more than €3 billion in Tier 1 capital will increase 20.3%, while those of global systemically important institutions will go up 28.4%.
Earlier, the Basel Committee on Banking Supervision said the world's largest banks will need to plug a total capital shortfall of €30.1 billion as of June 2018, up from €25.8 billion as of Dec. 31, 2017.
The EBA said banks continued to improve compliance with the liquidity coverage ratio. Lenders' average liquidity coverage ratio stood at 146% in June 2018, significantly above the 100% minimum threshold, with only four banks accounting for the aggregate gross shortfall of €22.5 billion.
Banks tend to hold significantly lower liquidity buffers in some foreign currencies, particularly the U.S. dollar, the EBA noted.