UPDATE 1-European banks seen raising $57 bln-M.Stanley poll

* Spanish cajas also need over 40 bln eur – investor poll

* Less than 10 banks seen failing EU stress test

* “Right” capital level seen 8 pct, 10 pct for inv banks

(Adds details from investor poll)

LONDON, April 4 (Reuters) – Europe’s listed banks will raise
over 40 billion euros ($57 billion) this year and fewer than 10
banks will fail an upcoming health check, according to a
majority in a poll of investors at a top conference.

Morgan Stanley (MS.N: Quote, Profile, Research) said 26 percent of respondents to a
poll of 800 investors at its European financial services
conference in London last week said listed banks would raise
40-50 billion euros of capital this year, 14 percent expected
50-70 billion to be raised and 10 percent expected more than 70
billion to be needed.

A third expected 30-40 billion euros to be raised.

European banks have raised or said they will raise about 10
billion euros so far this year, and pressure is building on
banks in Italy and elsewhere to raise more.

More than half of those polled reckoned Spain’s unlisted
savings banks, or cajas, need to raise at least the same amount:
40 percent said they should raise 40-60 billion euros and
another 23 percent said they needed over 60 billion.

The “right” level of core Tier 1 capital for retail and
commercial banks is 8 percent and for investment banks it is 10
percent, according to around 45 percent of those polled, easily
the most common responses.

Morgan Stanley said 43 percent of those polled — which it
said represented a range of international investors — expected
5 to 10 listed banks would fail a European stress test of the
sector, or would be prompted to raise capital ahead of the test
results due in June. Another 42 percent said there would be less
than five failures.

The investors were positive on European banks, but three
factors were holding them back: funding; a need for more clarity
on capital and funding rules; and greater policy support to
peripheral countries.

“Overall, we came away with the impression banks are pulling
many levers to adjust to the environment with a very
intense focus on cost cutting, repricing and deleveraging,”
Morgan Stanley analysts said in a note.

Investors were moderately positive: 47 percent of those
polled expected the European bank index to be between 5 and 15
percent higher by the end of the year, and a further 7 percent
expect a gain of more than 15 percent.

In Britain, Barclays (BARC.L: Quote, Profile, Research) is most at risk from possible
changes to the industry, the investors said. A commission is
considering breaking up banks or forcing them to hold more
capital for investment banking.
(Reporting by Steve Slater; Editing by Dan Lalor and David
Holmes)
($1 = 0.7031 euro)

UPDATE 1-European banks seen raising $57 bln-M.Stanley poll