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    STAN   GB0004082847


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Factbox - Capital shortfalls for five UK banks, mutuals

06/20/2013 | 05:19am EDT

LONDON (Reuters) - Five of Britain's top lenders need to plug a combined 27 billion pound ($42.3 billion) capital hole as part of an assessment by the country's new financial watchdog, which is trying to restore confidence in the sector.

About half of the shortfall will be filled by plans already underway, and none of the banks plans to issue new equity.

The following are details from the Prudential Regulation Authority's (PRA) capital assessment, which requires banks to have a 7 percent common equity Tier 1 ratio under full Basel III rules. The assessment is based on end-2012 data and includes further adjustments to capital and risk-weighted assets (RWAs).

(sources: PRA, companies):


Further losses and mis-selling cost 38.1 billion pounds

Increase in RWAs in prudent assessment 169.4 billion pounds

Total capital shortfall 27.1 billion pounds

Capital actions already in plans 13.7 billion pounds

Additional capital needed 13.4 billion pounds


RBS 13.6 billion pounds

Lloyds 8.6 billion pounds

Barclays 3.0 billion pounds

Co-op 1.5 billion pounds

Nationwide 0.4 billion pounds

HSBC, Standard Chartered, Santander UK had no capital shortfall


The majority state-owned lender said it needs another 18 months to strengthen its capital position enough to satisfy regulators. It has said it would not need to issue new shares or capital.

Plans already underway will fill 10.4 billion pounds of its shortfall, leaving a 3.2 billion hole. The bank said further actions will reduce that to 400 million pounds by the end of this year.

The bank is shrinking its investment bank and selling or winding down its non-core loans. It has agreed to sell a stake of its U.S. business, but that is not included in the PRA assessment as it may not occur until 2015.


The part-state owned bank said it is confident it can meet its shortfall without having to issue new shares or debt.

It has already put in place plans to raise 5.8 billion pounds, including through the sales of government securities, a portfolio of U.S. mortgage backed securities and shares in wealth management business St James's Place.

It expects to raise the remaining 2.8 billion through capital generation from its core business.

The PRA estimated Lloyds faces another 12.1 billion pounds for future losses and compensating customers for mis-selling or other conduct issues, far more than other banks.


Barclays said it can fill its shortfall by the end of 2013 through its capital generative businesses and more disposals of legacy assets, which it said had accelerated this year.

It said the PRA had agreed it does not need to issue equity capital.

Barclays expects its fully loaded Basel 3 CET1 ratio to rise to 10.5 percent by the end of 2015.

It also plans to issue more loss-absorbing capital in the form of a 2 percent layer of contingent capital. That could see it issue $10 billion more contingent capital, to add to the $4 billion issued in the last year.

The PRA also set a new 3 percent leverage ratio requirement, and said Barclays' ratio fell short at 2.9 percent, and would be only 2.5 percent after adjustments. Barclays said its restructuring plans include organic reduction in leverage "over time" and said it will keep the market updated as required.


The mutual did not return calls for comment.

Its leverage ratio was only 2.1 percent under the PRA assessment.


The mutual said last week it will force bondholders to help plug its capital hole. Using a "bail-in" rescue model, bondholders will have to swap their debt for new bonds and equity in the bank, which will be listed on the London Stock Exchange. The parent Co-op Group will also provide financial support for its bank arm.

(Compiled by Steve Slater and Matt Scuffham; Editing by Mark Potter)

© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
BANCO SANTANDER, S.A. -1.19% 2.4015 Delayed Quote.-17.33%
BARCLAYS PLC -4.92% 148.18 Delayed Quote.-16.66%
LLOYDS BANKING GROUP PLC -4.24% 41.535 Delayed Quote.-9.44%
NATWEST GROUP PLC -4.05% 223 Delayed Quote.-4.47%
STANDARD CHARTERED PLC -5.11% 557 Delayed Quote.30.91%
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