Banks must plug £27.1bn finance hole

The Prudential Regulation Authority (PRA) said Barclays needs to boost its balance sheet by £3bn, while state-backed players RBS and Lloyds must raise £13.6bn and £8.6bn respectively.

Nationwide building society is facing a £400m shortfall, while The Co-operative must stump up £1.5bn as already announced.

HSBC, Standard Chartered and Santander UK do not need to bolster their capital cushions, the PRA said.

The PRA said the banks already had plans in place to raise £13.7bn of the extra capital required and will stump up the remainder by the end of 2013 and early 2014.

It added that Nationwide and Barclays must raise additional capital to reduce their leverage and must submit their proposals by the end of the month.

Barclays, Lloyds and RBS said they were confident in their ability to meet the PRA’s requirements.

The total combined shortfall is the amount banks need to raise in order to ensure their balance sheets are healthy enough to withstand future financial shocks and prevent a repeat of the banking meltdown in 2008.

Lloyds and RBS already confirmed last month they would not need to tap investors for extra cash to shore up their finances.

RBS, which has by far the biggest capital gap, said actions being taken would reduce its capital shortfall to £400m by the end of the year, adding it aimed to resolve the remainder within the first quarter of next year.

Barclays said it was “confident” of boosting its capital by the end of the year and would not need to make a cash-call to investors.

It is slashing costs across the business, while also selling certain assets and confirmed plans to further boost finances through contingent convertible securities, known as CoCos, which automatically convert to equity should capital levels fall.