SOURCE: Paragon Financial Limited

Paragon Financial Limited

December 14, 2011 08:16 ET

Lloyds Banking Group and HSBC Holdings Showing Improved Capital Positions

The Paragon Report Provides Equity Research on Lloyds Banking Group & HSBC Holdings

NEW YORK, NY--(Marketwire - Dec 14, 2011) - Banking regulators announced last week that European banks will need to raise nearly EUR 115 billion by June 2012 as pressure mounts for political leaders to come up with a feasible plan to resolve the European debt crisis. In total, the European Banking Authority's latest round of stress tests showed that 31 of 71 banks needed stronger reserves. The Paragon Report examines investing opportunities in the Foreign Banking Industry and provides equity research on Lloyds Banking Group PLC (NYSE: LYG) (LSE: LLOY) and HSBC Holdings PLC (NYSE: HBC) (LSE: HSBA). Access to the full company reports can be found at:

The European Banking Authority (EBA) said that all of the U.K.'s banks that were subjected to the EBA's capital tests were cleared with sufficient capital. Most U.K. banks have taken steps to improve their capital positions and have relatively limited exposure to sovereign debt in countries such as Greece, Spain and Italy.

Under the stricter EBA definitions, Lloyds Banking Group was found to have a core tier one capital ratio of 10.1 percent, Barclays had a ratio of 9.8 percent, HSBC's ratio stood at 10 percent, while Royal Bank of Scotland was reported to have a ratio of 10.6 percent -- all clearing the EBA's hurdle of 9 percent in core tier-1 capital relative to risk-weighted assets.

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While UK banks passed the EBA exercise relatively smoothly, Olli Rehn, the European commissioner for economic and monetary affairs, said that the UK would not succeed in shielding "bankers and the City" from further European Union financial regulation. Rehn said that he "deeply regretted" the UK's refusal at the European Council last Friday to sign up to treaty change to introduce even greater fiscal rules, known as the 'fiscal compact'.

The refusal of British Prime Minister David Cameron to sign up to the treaty came after he failed to persuade other EU leaders to guarantee that the U.K.'s financial services sector would be protected from legislation that he did not want.

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