FRANKFURT – According to Reuters, only 10 European banks might need to raise capital in the wake of new global rules. The shortfall of these funds could not exceed 27 billion Euros ($31.43 Billion).

The EBA estimated that 52.2 billion euros would impact the sector. That’s a relief for an industry which has suffered from low profit for 10 years and still struggles to recover from the pandemic-induced downturn.

Basel III Directive, the European Commission’s final set of rules to prevent another financial crisis in 2008, was adopted by the draft. It increases the minimum capital requirement for EU banks at 0.7%, 2.7%, and 6.4%-8.4% respectively by 2015.

The document stated that the EBA had estimated that this would cause 10 of the 99 largest EU banks to be forced to raise more than 27 billion euro.

According to the EBA, the 17 EU-based banks included in the sample represented 75% of the total EU bank assets.

Although banks had sought a more flexible definition of the “output ceiling”, which gives them greater control over setting their capital requirements and their freedom to do so, their requests were rejected.

While the European Parliament is the ultimate authority to approve these rules, the regulators warned that the bloc should not depart from global standards.

Next week’s publication of the directive will give supervisors power to issue climate-related requirements. It also contains more stringent rules regarding branches of EU banks.

This legal support gives the European Central Bank additional legal backing. The European Central Bank has been pushing banks to report and address risks related to climate change such as weather hazards or changes in regulation.

They will be subject to an authorisation process for foreign branches. These have assets in excess of 510 Billion Euros at the end last year.

According to the draft, they must also comply with capital and liquidity requirements, as well as governance and risk management.

($1 = 0.8591 euros)