This appears Friday in the stress test of the European Banking Authority (EBA) with 51 European banks from fifteen countries.
In the worst scenario of the test, a three-year financial shock, the so-called core capital would hatching dei Paschi at -2.2 percent. In this hypothetical case, the bank would have no buffer anymore. In a less bad scenario, a baseline scenario based on previous estimates of the European Commission, it is a rate of 12 percent. The percentage tells us something about how safe the capital buffer is a bank.
Earlier Friday turned out that the oldest bank in the world to accept a capital injection from investors. So the bank needs to get 5 billion euros of additional capital. The bank faces many bad loans not paid back.
No capital requirement
Unlike in previous stress tests the banks could not lose this time or pass the test. There is no minimum capital requirement that banks must meet. The last time was used a minimum of 5.5 percent. According to the EBA such a requirement is no longer necessary because European banks have been a lot better off.
The surveyed banks do not directly come into action with a low score. Supervisors will take after the results of the test or in their annual assessment of the capital position of banks. It is then determined whether banks should strengthen their capital buffers.
Dutch banks
According to the Dutch Central Bank (DNB), the four surveyed Dutch banks are well able to withstand a severe test. Rabobank pulled while the lowest score. ING and ABN Amro followed. The Bank Dutch Municipalities scored the best.
It is difficult to make international comparisons, because Dutch banks are exposed to a violent scenario than banks in southern Europe. EBA joined the toughest event of an economic contraction of 3 percent and an increase in unemployment of 3.7 percent.
The idea behind this is that the decline of a well-performing economy is likely to be greater than
in an economy that has recently been shrunk considerably. The test differs so from that of 2014, that these results are not comparable with those of two years ago.
Deutsche Bank
The embattled Deutsche Bank says this year “more get out of the test than in 2014, despite the severe test conditions, “commented CEO John Cryan. “We are working hard to further improve the capital position of the bank.”
In the worst scenario would increase the core capital of the bank at 7.8 percent. In a baseline scenario would be 12.1 percent
Capital Buffers
According to the EBA, the European banking sector, the capital buffers significantly increased in recent years. At the starting position of the test, the position of European banks end of 2015, the core capital of banks amounted to 13.2 percent. In the worst scenario, this relationship come the end of 2018 at 9.4 percent.
The European banks are assessed on their resilience to absorb any new financial failures.
The surveyed banks together account for about 70 percent of the European financial sector. It comes to larger banks that have assets of at least 30 billion euros.
Information
The results are primarily intended to regulators, banks and market participants from providing information. The results should make it easier to compare the positions of banks to each other.
In 2011 dropped eight of ninety banks surveyed for the stress test. It was five Spanish banks, two Greek and one Austrian bank. In 2014, twenty-five banks did not make the test. Together, they had to collect nearly 25 billion additional capital to plug the holes
By:. NU.nl
