Capital Raising in European Banks

Abstract

The continuing tension in the European financial markets is accompanied by the requests by the competent banking authorities to strengthen the capital base of the European banks. Several initiatives have been carried out to this end during the recent years. This chapter aims at describing the various steps of the recapitalisation process of the European banking system. Additionally, the chapter gives an overview of recapitalisation operations for a sample of European banks during the period 2012–2016. The analysis is designed to assess whether the capital increase genuinely contributed to the soundness of banks or whether a more balanced solution would be to focus jointly on different drivers to achieve this goal, in primis the improvement of the risk management and efficiency.