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Official: EU banks have to raise $140bn

Brussels - European Union finance chiefs are close to agreeing upon new rules that would force banks to raise just over €100bn ($140bn) in new capital to be able to sustain worsening market turmoil, a European official said Saturday.

EU leaders are expected to sign off on the new guideline for the continent's biggest banks at a summit Sunday, said the official, who spoke on condition of anonymity because the discussions were still ongoing.

Strengthening Europe's banks is seen as a key precondition to cutting Greece's massive debt and finally getting a grip on Europe's worsening debt crisis. European officials want banks to accept more losses on their Greek bonds than the 21% they had previously agreed to, and that move would cut into banks' reserves.

The new rules would force systemically important banks to raise their core capital ratios to 9%, compared with just 5% to 6% they needed to pass EU stress tests this summer.

The ratio measures the amount of capital banks hold compared to their risky assets.

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