The world's major banks have bolstered their capital base by 8.2 billion euros during the first half of last year and now only have a shortfall of 3.7 billion euros under the new Basel III 4.5 percent minimum capital requirement, global banking supervisors said.
In its latest assessment of how global banks would do under the new global banking rules that are being phased in, the average common equity Tier 1 (CET1) for so-called Group 1 banks - international banks with Tier 1 equity in excess of 3 billion euros - fell to 8.5 percent from 10.8 percent at the end of 2011, reflecting regulatory changes.
For the 7.0 percent minimum capital ratios, which includes surcharges for the systemically-important banks, the aggregate equity shortfall plunged by 45.8 percent to 208.2 billion euros, the Basel Committee on Banking Supervision (BCBS) said.
To put the capital shortfall into perspective, the BCBS said the sum of after tax profits for all the Group 1 banks between July 1, 2011 and June 30, 2012 was 379.6 billion euros.
For smaller, internationally-active banks, the so-called Group 2, the capital shortfall is estimated at 4.8 billion euros under the 4.5 percent minimum capital requirement and 16 billion for the 7 percent capital requirement.
The ambitious Basel III banking rules were agreed by global leaders in 2010 in an effort to strengthen the global financial system following the 2008 global financial crises. The rules raise capital charges on banks around three times and impose much stricter supervision, especially on major, globally-active banks.
The rules are being phased through January 2019 to make sure that banks can still lend and stimulate economic growth while strengthening their capital positions so they can better withstand a crises.
In order to evaluate how the new capital rules affect banks, the Basel Commission - which comprises regulatory authorities from almost 30 jurisdictions - has carried out two prior surveys, assuming that banks fully implement the Basel III rules.
The latest survey, which is based on data from June 30, 2012, includes 210 banks, of which 101 banks belonged to Group 1 and 109 from Group 2.
Click for full details of the Basel Committee's latest survey.