A trader looks at computer screens on the trading floor of Bankinter bank during a Spanish bond auction in Madrid September 20, 2012. — Reuters picZURICH, Sept 20 — The world’s biggest banks would have needed to find €374 billion (RM1.5 trillion) if tough new capital rules to be phased in from January had been in place last year.

The finding, from the Basel Committee of global regulators, shows banks need to substantially bolster their balance sheets, although the estimate by the regulator implementing the new rules was €111 billion lower than an assessment made six months earlier.

The Committee said today that if the new rules, known as Basel III, had been in force at the end of December, the biggest banks would have needed €374 billion to hold core capital of 7 per cent of assets, the target level for banks to meet when new rules come in.

The committee had estimated in April the top banks would have needed €486 billion if the rules had been in place at the end of June last year.

The 102 biggest banks had an average capital ratio of 7.7 per cent based on the new rules.

But the capital of some of those big banks would have fallen below 4.5 per cent, while many would have been short of the necessary pass mark of 7 per cent, which includes a buffer they need to build up to prepare for bad times.

Basel III capital rules will be formally phased in from January next year.

The rules mean banks have to hold more capital in reserve to cover loans.

The aim is to create a bigger safety net to protect taxpayers from having to bail out banks and avoid a repeat of the 2007/09 financial crisis. — Reuters