European Banks May Face $128 Billion Capital Gap as Basel Bites
- McKinsey estimates impact of new capital, accounting standards
- Nordic, Dutch banks will be hit hardest by new standards
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European banks may have to plug a capital shortfall of 120 billion euros ($128 billion) if new regulations drawn up by regulators including the Basel Committee on Banking Supervision come into force as they stand, according to McKinsey & Co.
The committee is putting the final touches to the Basel III post-crisis capital rules, setting stricter standards for how lenders estimate the riskiness of their assets. The global banking industry has dubbed this Basel IV, arguing that it constitutes a new, separate round of regulation. European resistance to aspects of the rules has stymied efforts to meet an end-2016 deadline to complete the process, which has now stalled.