That’s the amount of new money that European Union banks need to raise in order to comply with European Banking Authority (EBA) regulations and “create an exceptional and temporary capital buffer to address current market concerns over sovereign risk,” according to the EBA.
That’s 114.7 billion euros – and comes just two months after the EBA said the region’s banks needed 106 billion.
According to Bloomberg, Spanish banks need 26.2 billion euros (Banco Santander alone needs 15.3 billion), Italian lenders require 15.4 billion euros and German institutions need 13.1 billion euros.
And in case you’re wondering exactly how the banks are going to come up with that extra cash, the European Central Bank is parachuting in with a plan. Not only has the ECB cut eurozone interest rates twice over the past month (the rate currently sits at 1%), but President Mario Draghi announced that the bank would make three-year emergency loans available to cash-strapped European banks.
As Draghi states, “It’s important that banks raise their capital, but they should do it in a way that wouldn’t imply a reduction in lending. That’s not an easy task at this point.”
Aside from monetary measures, the EBA advises banks to boost their capital reserves by either issuing more shares in the open market, or by (gasp!) cutting executive bonuses. Bonuses paid for by you and me, of course.
Busting the Downward Banking Trend
It’s hard to have sympathy for banks that have dug themselves a massive hole by investing in risky assets and employing reckless lending practices.
But not all banks are created equal. And it’s important not to tar them all with the same brush. In this regard, my colleague, Karim Rahemtulla, has recently conducted some intensive investment research on finding hidden banking gems.
And he found one. Not in the toxic sludge of Europe, but right here in America.
Founded over 140 years ago, this U.S. stalwart has obviously lived through many economic ups and downs. And at a time when multiple banks have fallen victim to the financial crisis, it’s not only survived, but continues to prosper.
The bank has remained true to its regional roots and now boasts more than $50 billion in assets. And with a profit margin well into the double digits, earnings are soaring. Already this year, its total earnings per share are 142% higher than for the entire year in 2010.
And while the media and politicians have blasted banks for hoarding cash, it dishes some of its huge cash reserves back to shareholders via a healthy annual dividend.
Even better… Karim is playing this bank with a strategy that allows investors to control shares for 94% less than what it would cost to buy the stock outright. And he’s predicting a double or triple over the next two to six months.
Out of fairness to paying White Cap Report subscribers, I can’t reveal the name of the bank here. But you can find out quickly, easily and cheaply. In addition, you’ll get all the latest research, insights and stock recommendations from Karim and the rest of the White Cap team every month. Take a look – you have nothing to lose, as we have a full money-back guarantee.