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Barclays And Rbs 'will Need Billions More In Capital'

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According to JP Morgan, Barclays will need to find another £12.8bn and RBS £8.5bn to meet new capital rules under a reformed regulatory regime. Officials hope to implement the changes from the end of 2010, though Carla Antunes da Silva, banks analyst at JP Morgan, said the date may be delayed if the economy is not in recovery.

She added: “I don’t think there will be any new share issuances between now and then.†She did not know how the banks would meet capital shortfalls, but did not rule out disposals. She added that HSBC has a £3bn shortfall.

Her estimates were based on holding a significantly higher amount of capital against riskier investment banking. Barclays is currently only allocating £8.5bn of capital to Barclays Capital, compared with the £23.4bn of reserves Ms da Silva reckons it needs. RBS has allocated £17.1bn to the Global Banking & Markets division but will need £22.5bn, she said.

All the political parties as well as the regulators are in agreement that “casino†banking will need far more capital in future. As a result, banks’ returns on equity – a measure of profitability – will fall from 15pc-20pc to 10pc-15pc. Her forecasts for lower returns on equity were echoed by Sandy Chen, banks analyst at Panmure Gordon. He added that Lloyds Banking Group would post £46bn of bad debts this year and next and RBS, which will be loss making until 2012, £39bn.

Although is this a rival trying to pour cold water over a competitor?

Who much will JP Morgan need?

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