Eurozone banks have €767bn shortfall

European banks have a capital shortfall of as much as €767bn, a study suggests, as the ECB probes the financial health of the region’s lenders.

French banks show the biggest gap of €285bn, followed by German lenders with as much as €199bn, Sascha Steffen of the European School of Management and Technology in Berlin and Viral Acharya at New York University said in their study. The figures assume a benchmark capital ratio for other book measures of leverage of 7%, they wrote.

“A comprehensive and decisive AQR will most likely reveal a substantial lack of capital in many peripheral and core European banks,” the authors wrote, referring to the ECB’s asset quality review stage of the comprehensive assessment.