Regulator Identifies £13.6bn Capital Shortfall at Royal Bank of Scotland

LONDON -- The shares of Royal Bank of Scotland slid 1 pence to 318 pence during early trade this morning after the Prudential Regulatory Authority said it had identified a £13.6 billion capital shortfall at the bank.

The PRA, which was established this year to regulate the bank sector and is part of the Bank of England, assessed eight major U.K. banks and building societies to ensure they held capital resources representing at least 7% of their risk-weighted assets by the end of 2013.

As at the end of 2012, the PRA calculated risk-weighted assets and capital resources at RBS were £624 billion and £30 billion respectively, giving a ratio of 4.8%.

The PRA acknowledged the bank's existing plans would produce extra capital of £10 billion this year, leaving a further £3 billion to be generated.

RBS said this morning that, based on its own projections, just an additional £0.4 billion was required over and above its 2013 capital plans. The FTSE 100 member claimed this £0.4 billion would be produced during early 2014.

Other organisations named by the PRA today as carrying a shortfall were Barclays, Co-operative Bank, Lloyds Banking Group, and Nationwide, with their combined deficit coming in at £27 billion.

HSBC, Standard Chartered and the U.K. arm of Santander were all deemed to have met the PRA's 7% capital measure.

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