但相比德意志银行（Deutsche Bank）和法国兴业银行（Societe Generale），德克夏银行就不值一提了。这两家银行持有的政府和商业债务都远远高于德克夏银行，同时还面临着同样的短期资金紧张。银行担心任何迫使它们削减主权债务的政府行动都会在市场中引发新一轮抛售，拖低所有欧洲银行股。
First on deck is dealing with Greece and its outstanding debt. The 21% haircut on the net present value of Greek bonds outstanding, which was painfully agreed to by the banks and the Europeans earlier this summer, appears to be woefully inadequate. Greece simply cannot afford to meet its debt obligations under the plan given its depressed economy. A haircut of 50% to 60% is now being debated among European leaders, according to people familiar with the situation. There is also talk of simply exchanging the impaired Greek bonds with new bonds issued by the EFSF bailout fund, which would have lower face values.
Both strategies have European banks up in arms. As large holders of the toxic debt, the banks are opposed to further write downs as it could jeopardize their solvency. Greece is of course just the tip of the iceberg. From day one there was fear that once the market relents to a large Greek bailout a domino effect would occur, forcing the banks to take massive haircuts on all their peripheral euro zone debt holdings. The markets have already pummeled the shares of one bank, Dexia, over talk of further write-downs for the banks. The Franco-Belgian bank was forced last week to seek a massive government bailout as it saw its short-term funding pulled by jittery money market funds.
But Dexia is small fries compared to the big European banks like Germany's Deutsche Bank (DB) and France's Societe Generale. Those banks hold far more government and commercial debt than Dexia, while being exposed to the same short term funding limitations. The banks fear that any government action, which would force them to slice their sovereign debt holdings, would prompt another sell off in the markets, dragging down every last European bank.
The European leaders believe that confidence could be restored by forcing the banks to increase their cash on hand from a current minimum of 5% of their assets to 9%. The larger cushion would allow the banks to absorb greater haircuts on their sovereign debt holdings and deflect market skepticism as to their solvency.
The banks are obviously not happy about this. Joseph Ackermann, the head of Deutsche Bank, said last week that forcing the banks to boost capital would be counterproductive and that it would be tough for investors to accept further haircuts on their Greek debt. It's clear why Ackermann is so upset. Forcing the banks to cut the value of their Greek holdings, while at the same time requiring them to hold on to more of their cash, is hitting the banks' balance sheet from both ends.
Big bank fix
To stop the bleeding and firmly resolve this crisis, the Europeans need to finally get out their cash bazooka and spray down the euro zone's banking system. The EFSF was expanded to meet the fiscal funding needs of peripheral euro zone members, which were having a hard time raising debt in the private markets. The EFSF's mandate and size need to be expanded to include bank recapitalization.
Left on their own, the banks would probably choose to cut back on lending to boost their capital as opposed to issuing new equity or selling assets at fire sale prices. That would hurt an already weak European economy. To avoid this outcome, the banks need to be injected with cash at the same time they are forced to write down the value of their bad debt. The move would ostensibly move all the bad debt from the banks to the government. Over time, it is hoped that the banks pay will pay back the cash, but there is no guarantee they will.