Ireland's banks are on track to meet new capital requirements designed to rein in the risk taking that left the country's financial system close to collapse, analysts said today.
The Financial Regulator echoed their sentiments, which followed the announcement of a scheme by the Basel Committee on Banking Supervision that will require lenders to have common equity equal to at least 7 per cent of assets, weighted according to their risk.
In March, the Regulator Matthew Elderfield directed Ireland's biggest lenders to reach this level by the end of the year.
Today his office said Irish banks were "well-placed" to meet new capital levels.
"The timeframe for implementation is ahead of those required by the Basel Committee," the Regulator said in a
statement today.
"This should ensure that Irish institutions move to a strong capital position quickly and mean they are well placed to
implement the new standards."
Mr Elderfield ordered Irish lenders to raise capital after bad debts surged in the wake of the country's worst recession on record.
Emer Lang, an analyst with Davy Stockbrokers said: "We don't see these new hurdles raising any incremental challenges for Irish banks...The new 7 per cent equity hurdle is bang in line with the minimum level set by the regulator."
Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin, added: "We do not anticipate that these revised rulings should be a problem for domestic banks."
The euro surged following the Basel agreement and upbeat Chinese data, which also propelled the Australian dollar to its highest in four months against the dollar.
Automatic buy orders triggered at around $1.2720/30 and $1.2750/70 helped extend the euro's rally to nearly 1 per cent, but it later faltered at $1.2800.
The euro has been in a downtrend against the dollar all year on concerns about sovereign debt and the European banking system.
"The introduction of the new Basel rules will be years away, so the market's focus will soon shift back to more immediate factors, such as euro zone debt auctions and suspicions on the EU stress test," said Keiji Matsumoto, strategist at Nikko Cordial Securities in Tokyo.
Agencies