And it does not boost the long-term capacity of a bank to absorb losses without defaulting.
Gontha says Djojohadikusumo and his British partner must be prepared to absorb losses, at least initially.
Conversely, if the companies fail, the government is last in line to absorb losses.
The ECB reportedly now wants to allow senior bank bond-holders to be the first to absorb losses.
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The extra capital was needed "to ensure sufficient capacity to absorb losses and sustain lending", the FPC said.
He says it should mean banks having a greater ability to absorb losses in future crises without taxpayer help.
His plan includes a reserve fund providing a partial guarantee to absorb losses if housing prices continue to decline.
The Basel Committee is also trying to set minimum capital requirements, which would make banks more able to absorb losses.
The third element of the rescue plan envisages a strengthening of big eurozone banks, which are perceived to have too little capital to absorb losses.
That means the financial damage to Lloyd's from this coincidence of horrific disasters is limited, with no material impact on the capital it holds to absorb losses.
In other words, Lloyds seems to have lent 455 times the value of the capital earmarked in its balance sheet to absorb losses, just in case these mortgages go bad.
That would bolster confidence in the banks, making it easier for them to raise capital, which they will need to absorb losses from the stimulus loans of the past two years.
But, of course, the embarrassment is greatest for Barclays, which is fast losing what is as important to a bank as capital to absorb losses, namely a reputation for integrity and competence.
To translate: this portrayed Dexia as one of the strongest banks in Europe, because it meant Dexia was deemed by regulators to have more than twice the amount of capital it needs to absorb losses.
And so, arguably, three, four, five years ago people became unmoored from their long-term risk tolerances and became purely return-seeking and, now, I think, are in more cases, frankly, being more thoughtful about their capacity to absorb losses.
If the fundamental disease is that individual eurozone countries have borrowed too much or are still borrowing too much, then the transmission mechanism making whole economies sick is the fear that banks possess too little capital to absorb losses that may arise if these country fail to repay all they owe.
Even so, and as pointed out by Sir Mervyn King - the governor of the Bank of England who chairs the oversight body of the Basel Committee, which is known as the Group of Governors and Heads of Supervision (GHOS) - the fundamental cause of the crises at these banks and others was that they had too little capital to absorb losses.
As you know, banks have to hold capital to absorb potential losses when they lend.
The taxpayer has already bailed out the banks and cannot afford to farther absorb bank losses.
The big boys victimized by the whales of Wall Street can often absorb their losses.
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There is no natural law saying that private investors should participate in government mortgage guarantees while the taxpayers absorb the losses.
As a group, the public lenders have capital equivalent to just 4.5% of total loans, and so cannot absorb big losses.
Banks holding Greek sovereign debt are expected to absorb substantial losses on the assets by as much as 60%, by some estimates.
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But there is not enough equity and subordinated debt to absorb the losses, so depositors would somehow have to be bailed in too.
Higher capital requirements would put more of the shareholders' money at risk and, crucially, enable banks to absorb more losses in bad times.
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Thus, these small equity cushions, and low pre-provision earnings suggest they would be unable to absorb these losses out of earnings in a stress situation.
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Leverage is the ratio between what banks lend and invest on the one hand and the capital they hold to absorb potential losses on their loans and investments.
Before taking over Khazanah, for example, he masterminded a restructuring of Malaysian Airlines, whereby the government agreed to absorb the losses on the carrier's unprofitable domestic routes.
However, unlike the banks being tested, insurers that fail the test will not yet be formally required to top up the capital they hold to absorb future losses.
In the past, this alternative was not possible due to the highly perishable nature of bananas and the unwillingness of the retailer or vending operator to absorb high losses due to overripe product.
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