European banks increased capital holdings by 205 bln euros ($265 bln) to meet new EU rules

LONDON – Europe's top banking regulator says that the region's banks have increased their capital reserves by €205 billion ($265 billion) since December to meet new rules aimed at boosting investor confidence in the ailing sector.

The European Banking Authority estimated in December that 71 banks needed an extra €115 billion in capital cushions to make sure they could survive a serious economic and financial crash.

Market watchers had feared the request to raise the money would have forced the banks to rein in on lending to businesses and households, hurting economic growth.

In a report Wednesday, the EBA says the banks' efforts to raise the cash did not lead to a material drop in lending. They increased the reserves mainly by issuing new capital, withholding dividends and reducing holdings of risky assets.