July 22, 2013

What European banks need is not to de-leverage but more capital, lots of it

Sir, Christopher Thompson reports on a Royal Bank of Scotland analysis that states “Banks need ‘to shrink’ balance sheets, to shrink their balance sheets dramatically to ensure that the continent could withstand another financial crisis… But as European banks deleverage, such as by selling loan books, there are knock-on effects to the real economy… It’s a catch-22”, July 22.

Forget it! What Europe's real economy and European banks need is more bank capital, lots of it.