Thursday, October 13, 2011

Banks Against European Plan to Recapitalize and... Stop Paying Bonusses

Now we now why banks are so upset. Things still do not change. Europeans banks oppose the plan to save their banks as it contains provisions to stop the banks from paying bonusses and dividends.

A "haircut" of between 30 and 50 percent for Greece's private creditors was under consideration. Is 30% or even 50% reallymark-to-market?

Reuters: European officials have been working on magical plans to shore up the balance sheets of banks through recapitalizations. The European Banking Authority, which is conducting an assessment of bank capital needs, was likely to "mark down their holdings of sovereign debt to market value and apply a 9 percent core Tier 1 capital ratio when deciding whether they need more funds".

European Commission President Jose Manuel Barroso called for a permanent rescue fund to replace the EFSF from the middle of next year instead of in 2013, an idea that German Finance Minister Wolfgang Schaeuble also backed.

"The German banking association hit back at elements of Barroso's proposals, saying his idea to ban banks from paying out dividends pending recapitalization would hamper efforts to raise capital".

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