Germany Tells Banks to Build $25 Billion in Capital Buffers

Germany is telling its banks to rebuild capital buffers that they were allowed to deplete at the onset of the pandemic, joining other European countries in tightening regulations again as lenders take more risk, Bloomberg News reported. The country’s banks have to set aside 22 billion euros ($25 billion) of capital buffers by February next year, the country’s financial authorities said on Wednesday. The vast majority have enough capital on hand to meet the regulatory demands without raising fresh funds, BaFin President Mark Branson told reporters. “It’s time to switch to prevention mode,” Branson told reporters on a conference call. “There are decisive signals that it is time to make the financial system more resistant.” Germany is joining countries including France and Ireland in reactivating a requirement that banks hold extra capital to help them cope with a downturn in the economy. The region weathered the worst of the pandemic’s fallout thanks for massive support from taxpayers for companies and consumers and unprecedented regulatory relief for banks. Read more.