The world's biggest banks would have needed more than $600 billion based on last year's balance sheets to achieve the minimum capital ratios required under tough new rules.
The Basel Committee of global regulators said if the new rules, known as Basel III, had been in force at the middle of last year, banks would have needed 486 billion euros ($638 billion) to hold core capital of 7 percent of assets, which is the target level for banks to meet when new rules come in.
The 103 biggest banks had an average capital ratio of 7.1 percent based on the new rules, just enough to pass the standard, the BIS said on Thursday in a review of the implications of the Basel III capital standards.
But the capital of some of those big banks would have fallen below 4.5 percent, while many would have been short of the neceessary standard.
Basel III capital rules will be formally phased in from January 2013.
They will mean banks have to hold more capital in reserve to cover loans. The aim is to create a bigger safety net to protect taxpayers from having to bail out banks and avoid a repeat of the 2007/08 financial crisis.
The BIS assessment suggests Basel III rules could hit banks even harder than many in the industry had feared.
The average of 7.1 percent for the big banks under Basel III compares to an average reported core capital level of 10.2 percent, the BIS said.
BIS said its calculation was not comparable to industry estimates, however, and the actual impact should be reduced by banks' ability to phase in implementation, the profits they make, and management changes to business models.
Profit after tax of the big banks in the sample was 357 billion euros in the year to the end of last June.
The biggest changes to capital are a tighter definition of what is core capital, charges for counterparty credit risk, and an increase in risk-weighting for some assets, such as in their trading book or securitised products.
Risk-weighted assets increase on average by 19.4 percent under the Basel III framework, it said.
The BIS's estimated capital shortfall includes a capital conservation buffer and a surcharge for global systemically important banks where applicable.
The BIS did not name the banks where the shortfalls lie.
Half of the gap is likely to be in Europe. The European Banking Authority (EBA) last week estimated 27 of its top 48 banks would have needed to raise 242 billion euros to get to 7 percent core capital under Basel III rules.
Thirteen of the big banks in the survey came from the United States, 13 were from Japan, nine were from Germany and there were six each from Britain, Canada, China and Turkey.
About 100 more smaller "group 2" banks would have needed to find 32 billion euros to get to 7 percent capital, the BIS said.
Changes to liquidity rules could also leave banks short of funding, the BIS said.
The liquidity coverage ratio (LCR) for the big banks, a key plank of new international liquidity standards, would have been 90 percent if the rules were applied at the end of June. Banks have until 2015 to meet the LCR standard.
That would have left an aggregate liquidity shortfall of 1.76 trillion euros, representing about 3 percent of the assets for those banks, the BIS said.
($1 = 0.7622 euros) (Editing by Jon Loades-Carter and Andrew Callus)
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