19 August 2011

FN: Bank regulations set to hit European private equity

In the last two-and-a-half years, commitments by banks have accounted for 12 per cent of European private equity funds, which have raised a total of $154.4 billion over the period, according to the new data provider, Preqin. New bank solvency regulations – such as the Volcker Rule in the US and Basel III in Europe – governing the proportion of assets banks can hold in private equity mean that banks would have to hold far higher levels of capital against their private equity commitments.

European private equity looks set to be affected more than the industry in other parts of the world. Nearly half, or 45 per cent, of European banks commit to the asset class, compared with just 14 per cent of banks in the US. As such, a greater proportion of European private equity funds have commitments from banks.

Globally, 6 per cent of capital committed to private equity between 2009 and the first half of this year came from banks, while 9 per cent of the value of all companies owned by private equity involves capital invested by banks.

Full article (FN subscription needed)

© Financial News