Banks’ capital adequacy ratio below average: S&P

Credit rating agency Standard & Poor's has said that most major banks do not have enough capital to comfortably maintain their current ratings and facing risks of further downgrades.

Standard & Poor's released a report on Monday, which compares so called risk-adjusted capital adequacy at 45 of the world's top lenders.

As per S&P's report, Citigroup, UBS, and Mizuho Financial Group are among the banks with the weakest capital.

According to S&P, the worldwide average risk-adjusted capital ratio stood at 6.7 per cent as of June 30, but Citigroup's RAC stood at 2.1 per cent, UBS's at 2.2 per cent, while BBVA's RAC was
5.4 per cent.

Japan's Mizuho Financial Group's RAC stood lowest at 2 per cent.

Bank of America, Deutsche Bank and Unicredit were also below average with RAC 5.8 per cent, 6.1 per cent and 6.3 per cent respectively.

Speaking on the issue, S&P said, "The results to date appear to confirm our view that capital is a rating weakness for a majority of banks in our sample."

However, HSBC, Goldman Sachs and Standard Chartered had above average financial strength with RAC at 9.2 per cent, 8.3 per cent and 8.1 per cent respectively.