EU Banks Face 50% Capital Surcharge on Private-Equity Stakes

European banks will have to hold 50 percent more capital in reserve against investments in private equity and hedge funds under draft capital rules being considered by the European Union to curb risk.

Lenders will have to price risky investments at one-and-a-half times their current value, according to a draft European Commission document obtained by Bloomberg News, and so hold more regulatory capital against those holdings on their balance sheets to cover potential losses.