As far as trying to do an initial public offering (IPO) of common stock to raise equity capital, forget it.
The amount of common equity - the best capital for absorbing losses - that banks have to hold will rise from 2% of their loans and investments to 7%.
The new rules state that the amount of common equity - the best capital for absorbing losses - that banks have to hold will rise from 2% of their loans and investments to 7%.
They own preferred shares in many banks, common equity in others and stand ready to inject capital in others still.
Wells Fargo, for instance, has more money in second liens than it has tangible common equity, or the most solid form of capital.
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In order to support high levels of wholesale funding, UBS says, banks may need to demonstrate levels of core Tier one capital, which is effectively common equity, well in excess of the levels most Eurozone banks currently hold.
"With its high leverage ratio to tangible common equity, we believe Lehman needs to raise substantial capital regardless of market conditions in order to take its needed write-downs, " Einhorn said in an email Tuesday.
The OECD found that increased government loan guarantees and venture capital and equity funding were the most common government responses to the financing gap.
From a text book perspective, Basel III requires banks to hold 4.5% of common equity, Basel II requires 6% of Tier I capital of risk-weighted assets.
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The bank's plan to issue 308.6 million new common shares was aimed at "strengthening the bank's equity capital in light of expected regulatory changes, " Chief Executive Josef Ackermann said.
"In my experience, it is more common for a woman who has started a business and taken equity capital to feel like she needs to repay, when she doesn't, because it was equity -- which is the view most men take, " she says.
If a government recapitalisation does prove necessary, the treasury is likely to take one of two routes: a preferred-stock investment that allows the agencies to raise more capital of their own, or nationalisation through a common-equity injection that leaves current owners with nothing, and thus offers the taxpayer a better deal.
The capital that earns a variable return--the equity, the common stock--is taxed twice.
Moreover, the convoluted method of determining what common equity is reinforces the belief that no one really knows, or can calculate, what capital is by looking at a bank statement.
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As part of the package of new standards, banks will be required to increase their minimum common equity requirement from 2% to 4.5%, and will additionally have to hold a capital conservation buffer of 2.5%, "to withstand future periods of stress, " the Basel Committee said in a press release.
The company acknowledged it had fallen behind in its goals for two critical measures of capital strength, tier-one capital, which was at 7.3% at the end of September, and tangible common equity to risk-weighted assets, which was 5.9%.
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