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They can improve their capital ratios by retaining profits, which adds to capital, and shrinking their balance sheets.
But they said the banks would be able to raise their capital ratios by retaining profits or selling riskier assets.
The tentative plan would give banks until June 30 to increase their reserves, which they could achieve by selling new shares, retaining profits or selling assets.
Santander bolstered its reserves largely by converting 6.8 billion euros in bonds into shares, retaining profits and transferring a stake in its Brazilian unit to an outside investor.
They argue that there is no reason why healthy banks cannot raise more capital by retaining profits or selling new shares.
Their collective profit in 2009 — a bad year for banking — was 209 billion euros, suggesting that most institutions would be able to meet the new requirements by retaining profits instead of paying them out to shareholders.
Similar(48)
Multinationals can generally defer paying tax to their home governments by retaining profit earned abroad in their foreign units.
In the dog-eat-dog capitalist world of his day, Carnegie had a simple and brilliantly successful formula for succeeding in the steel business: quickly adopt the latest technology so as always to be the low-cost producer and thus profitable, even in bad times; retain profits in good times to be able to snap up failing competitors at bargain prices.
It allows companies indefinitely to defer payment of some tax on their retained profits.
Mittelstand firms themselves usually prefer steady growth from retained profits to borrowing.
The company has decided not to borrow money at all, meeting its modest financing needs through retained profits.
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CEO of Professional Science Editing for Scientists @ prosciediting.com