European banks need £56bn to boost capital, says Merrill

European banks will have to raise at least another €73 billion (£56.3 billion) to boost their capital reserves, a major report predicted this afternoon.

Writing as Dutch giant ING raised €10 billion from taxpayers and Sweden became the latest state to offer a lifeline to its banks, Merrill Lynch analysts said Deutsche Bank and Italy's UniCredit were now most in need of major fundraisings.

"Raising such volumes of capital could be very difficult in the current environment. In most cases it will require government support," wrote Stuart Graham and Alexander Tsirigotis. Deutsche may need to raise €8.9 billion, UniCredit €7.4 billion and BNP €7.3 billion, they calculated. Barclays may need to raise another £4 billion after the £6.5 billion it announced last week.

Meanwhile, Société Gé*érale's shares were hit by another wave of selling in Paris amid speculation it may need a government bailout. Merrill's research said it could need €6.5 billion of extra capital.

SocGen's shares fell as much as 12% today to €40.05 its lowest since 2003. Local rivals BNP and Crédit Agricole, also on Merrill's danger list, fell too.

French Economy Minister Christine Lagarde today confirmed France could take stakes in its banks, but stressed it would not go as far as the Brown-Darling plan in the UK. Sweden outlined a plan worth more than $205 billion to back its banks with credit guarantees and a bailout fund.

ING shares gained massively from a deal announced last night that will see it sell up to 8.5% of its equity. They leapt 23% as investors figured the deal would avert a dilutive share issue.

In Germany, it emerged that Bayerische Landesbank the second biggest state-owned lender is to beg billions from the government.

Bavarian Finance Minister Erwin Huber said BayernLB would need "billions of euros in the form of guarantees and a capital increase". German banks have so far been reluctant to take up €500 billion of approved state aid.