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EU Banks Shrink Assets by $1.1 Trillion as Capital Ratios Rise

European Union banks have shed more than $1.1 trillion of assets since the end of 2011 in a shift away from risky investments such as asset-backed debt as regulators push lenders to shore up their balance sheets.

Lenders reduced assets weighted for risk by 817 billion euros ($1.1 trillion) between December 2011 and June 2013, the European Banking Authority, the bloc’s top banking regulator, said in a report yesterday. Banks’ core Tier 1 capital ratios, a measure of how well they can absorb losses, rose to 11.7 percent from 10 percent over the time period.