European banks may follow UBS and take advantage of improved investor appetite to top up capital and please regulators but they are not under the same intense pressure as the world’s largest wealth manager. UBS is selling $3.5 billion of shares, saying it would suffer a second-quarter loss. Its rivals are unlikely to take a similar hit, but there are enough headwinds to prompt more equity issuance, analysts said. They believe they will strengthen their position as the center of wealth management which is coming under pressure at the moment.

The Swiss National Bank and banking regulator FINMA made it clear they wanted UBS to strengthen its capital, potentially paving the way for the government to sell a 9 percent stake. That is likely to have kicked UBS into action. Its rivals will not be under the same pressure, but a difficult economic backdrop could prompt them to take advantage of an improvement in investor confidence in recent months. The Swiss regulator is clearly getting a lot tougher than other regulators,” said Simon Maughan, analyst at MF Global.

But at the same time there are siren voices, from the U.S. in particular, saying the whole banking system in Europe is overleveraged and it needs to come down and banks will be raising capital for a long time to come. Banks including Spain’s BBVA, Germany’s Deutsche Bank and lenders in Italy and France are most in need of fresh capital to build up a buffer, several analysts and bankers have said.

UBS follows Barclays in addressing worries about low capital, after the British bank sold its asset management arm for $13.5 billion earlier this month. U.S. banks have raised billions this year to repay taxpayer bailouts, leaving capital ratios at most European peers lagging. Europe’s banks have raised $43.4 billion this year to account for 30 percent of the total raised by banks globally. Last year they raised a record $126 billion, or 40 percent of the global amount, according to Thomson Reuters data. By comparison, U.S. banks have raised $69 billion this quarter alone, adding to a record $150 billion raised in 2008.

The prospect of rising bad debts could force banks to act, although strong first-half profits from most investment bank arms could provide a boost to capital. But bad debts are not expected to peak until 2010, and euro-zone banks face another $283 billion of writedowns in the next 18 months, according to the European Central Bank. Banks need to continue paying close attention to risks of more losses on toxic assets, Bank of France governor Christian Noyer warned on Friday, although he said the solvency of his country’s banks was “satisfactory.