20101122 1826 Breaking News.

The European Union's bailout of Ireland may give short-term relief to markets, but despite euro zone hopes, may not prevent markets from pushing Portugal to get EU assistance too, unless a more general solution is found soon.On Sunday, Ireland applied to the EU and the International Monetary Fund for a financial aid package to cover its fiscal needs and potential future capital requirements of its banking system. pricorn23: EU finance ministers backed the request for aid, which an EU source put at 80-90 billion euros, to stop market concerns about Ireland's debt from spreading to other countries with big budget gaps such as Spain and Portugal, threatening a systemic crisis. 

The top 35 US banks will be short of between $100 billion and $150 billion in equity capital after the new Basel III global bank regulations are imposed, with 90 percent of the shortfall concentrated in the biggest six banks, according to Barclays Capital.The BarCap study assumes the banks will need to hold top quality capital equal to 8 percent of their total assets, adjusted for risk.

This 8 percent tier one capital ratio, a key measure of bank strength, provides a one point cushion against falling below the effective global minimum of 7 percent set in September by the Basel Committee on Banking Supervision.

The Basel III reforms will hit banks in two ways – by gradually tightening the definition of what counts as tier one capital; and by forcing banks to increase the risk adjustment for big swathes of their businesses. Banks can respond by increasing their capital through retained earnings or equity issuance or they can cut their risk-weighted assets through sell-offs and by cutting back on risky business lines.