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One euro zone bank falls short of ECB capital requirements

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FRANKFURT (Reuters) – One euro zone bank is falling short of the European Central Bank’s capital requirements for 2019, meaning it will face restrictions on how much it can pay out to investors and executives, an ECB presentation showed on Monday.

The ECB did not name any of the banks in its annual presentation on the standing of the euro zone’s top lenders, which showed a slight increase in capital demands from the year before as European Union “buffers” introduced in the wake of the financial crisis are phased in.

These requirements are closely watched by analysts as any bank that fails to meet them faces a cap on how much it can pay in dividends, bonuses and certain coupons and comes under pressure to raise capital.

Most of the 119 banks under ECB supervision had way more Core Equity Tier 1 (CET1) capital than demanded by supervisors. Four barely made their required level and just one fell short, a slide in the ECB’s presentation showed.

“Most significant institutions already have capital levels above the CET1 levels and buffers required by the ECB and national authorities, respectively,” the ECB said in a press release.

Italy’s Carige was asked by the ECB to raise more capital last year but failed to do so after its top shareholder pulled back at the last minute. It is currently under an ECB-appointed administration and looking for buyers.

As part of its Supervisory Review and Evaluation Process (SREP), the ECB also handed out “quantitative liquidity SREP requirements” to three banks, likely meaning they have to set aside more cash such as foreign-exchange buffers.

(Reporting By Francesco Canepa; Editing by Raissa Kasolowsky)

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