Austrian banks will need 10 billion euros ($13 billion) in additional core Tier 1 capital to comply with the Basel III rules and pay back state aid, according to estimates by the country’s central bank obtained by Bloomberg.
Banks will raise most of the money in the next few years, rather than wait until 2019, when the rules come into effect in full, according to the central bank’s estimates. The figure includes the 5.9 billion euros of government aid banks received during the financial crisis and still need to repay.
The estimate is less than the central bank’s estimate in March, before the Basel Committee on Banking Supervision relaxed some of its planed rules in September. Andreas Ittner, the central bank’s director responsible for bank supervision, said on March 3 banks would require a “low two-digit billion euro” amount to comply with the rules. His estimate didn’t include the state aid repayment.
The Basel Committee’s rules require banks to have common equity equal to at least 7 percent of their risk-weighted assets from 2019. Total capital, including a so-called capital conservation buffer, will have to total at least 10.5 percent. Austrian banks will need a total of 15 billion euros to 18 billion euros to meet both the core Tier 1 and total capital ratios, according to the central bank estimates.
The Basel Committee’s decision to exclude some forms of capital that previously counted as the highest-quality core Tier 1 capital left Austrian banks short of capital, the estimates show. The regulators softened those rules in September.
Austria’s biggest banks include UniCredit Bank Austria AG, Erste Group Bank AG, Raiffeisen Bank International AG, Bawag PSK Bank, Oesterreichische Volksbanken AG and Hypo Alpe-Adria Bank International AG. Bank Austria, fully owned by Italy’s UniCredit SpA, Erste and Raiffeisen are also the three biggest lenders in eastern Europe.