Banks prepare to raise more capital

EUROPE’S banks expect to be told to raise more capital under a Franco-German effort to solve the eurozone debt crisis after the state rescue of Franco-Belgian lender Dexia.

Dexia agreed to the nationalisation of its Belgian retail bank and secured €90 billion in state guarantees — in a rescue that raises pressure on other eurozone countries to strengthen their banks.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said on Sunday they would tackle Greece’s woes and agree how to recapitalise the regions’ banks by the end of the month, but they declined to reveal details of their plan.