Regulator Reveals £27.1bn UK Bank Shortfall

A City regulator has revealed the capital holes at UK banks total £27.1bn - with Royal Bank of Scotland (RBS) facing the biggest shortfall.

The Prudential Regulation Authority (PRA) said that while the collective 'black hole' was more than the £25bn it originally estimated, the banks involved have plans in place to raise £13.7bn by the end of the year.

The PRA put the RBS shortfall at £13.6bn, Lloyds at £8.6bn and Barclays at £3bn - all measured from the end of 2012.

The Co-op needed to raise £1.5bn and Nationwide £400m.

All the banks had previously announced ways to plug the gaps in their finances, the PRA said, while it also confirmed that HSBC, Standard Chartered and Santander UK did not need to bolster their capital cushions.

Share prices correct at 08.04am Thursday June 20

The figures were announced just hours after the Chancellor George Osborne confirmed he was progressing with the sale of the taxpayers' stake in Lloyds but had put the brakes on an imminent return to the private sector for RBS.

While those developments were digested by investors this morning, bank shares and the wider FTSE 100 were also hit after comments from the US Federal Reserve which confirmed that bond purchases to support America's economy would soon be slowed.

Barclays, Lloyds and RBS said they were confident in their ability to meet the PRA's requirements, which are designed to ensure that banks are strong enough to withstand any future financial shocks but at the same time do not hamper their ability to lend in support of the economic recovery.

Lloyds said it was making better than expected progress on boosting its balance sheet.

A spokesman said: "Lloyds Banking Group's strong capital position means that we now expect to have a fully-loaded Core Tier 1 ratio of above 9% by end of June 2013, six months ahead of our previous guidance, and approximately 10% by the end of 2013, a year ahead of guidance."

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

RBS 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.

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