Banks across Europe are ex-pected to write-off half the money they are owed by Greece as part of the eurozone debt deal but the decision will have a “negligible effect” on domestic banks, according to the Central Bank of Malta.

“Maltese banks are negligibly affected by the 50 per cent write-off in Greek debt as their holdings are extremely limited,” Central Bank Governor Josef Bonnici said.

Banking shares across Europe saw positive gains after eurozone leaders announced the deal in the early hours of Thursday following hours of talks. The deal stipulates that banks must forfeit 50 per cent of the money they are owed in a bid to cut down Greece’s mounting debt and give the country some room for manoeuvre.

Apart from this, eurozone leaders agreed to impose higher capital requirements for banks. Banks will be required to hold a Tier 1 capital ratio of nine per cent by June next year. Tier 1 capital is the amount of funds held by a bank for general solvency purposes and regulators have so far requested a ratio of not less than four per cent.

If banks cannot find the capital themselves, individual countries can step in to shore them up and the European Financial Stability Facility could be used as a measure of last resort.

However, this more onerous requirement was unlikely to affect Maltese banks, Prof. Bonnici said. “Domestic banks’ holdings of Tier 1 capital are adequate and unlikely to be affected by the new requirements,” he said.

The eurozone deal, he added, was a good development, which, in combination with greater observance of the stability and growth pact, should pave the way for a more stable and stronger eurozone.

When announcing the financial results for 2011, Bank of Valletta yesterday said that it had written-off €6 million in Greek sovereign bonds even before the eurozone deal.

The bank’s Tier 1 capital ratio stands at 10.5 per cent, well above the new requirement.