Despite this, European banks are optimistic about their growth and financial performance this year, and are expecting to increase both lending to the real economy and pay to their employees.
We have already seen significant pre-emptive capital raising in the market. With such a high number of banks considering coming to the market for more capital in Q3 and Q4, this looks to have been a wise move.
Thirty percent of Eurozone banks may need more capital Across the Eurozone markets surveyed, on average about 30% of banks cannot rule out further capital raising post-AQR. Across the whole sample of European banks, a significant minority of banks (8%) fully expect to have to raise further capital following the AQR and a further 20% think they might still need to raise capital.
The survey was conducted in
Market divided on loan-loss provisions Thirty percent of banks also expect to have to raise provisions this year. Banks in
However, the improving economic conditions mean that 23% of banks expect to be able to release provisions in the next six months, which is an improvement on H2 2013, when just 14% expected to be able to release provisions.
In part, this market divide can be traced back to local-market concerns about the economy and lingering concerns about sovereign debt, but there is also a clear correlation with pressures put on banks by the AQR.
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