Brussels, 23/07/2010 (Agence Europe) - On the evening of Friday 23 July, the Committee of European Banking Supervisors (CEBS) published the results of the second banking resistance test which it coordinated at European level, after the one it carried out in 2009 (EUROPE 9990). If the worst-case scenario involving a sharp economic decline combined with a deterioration on the sovereign debt market came to pass, the seven following banks - of the 91 tested - would be under-capitalised (ratio of “Tier 1” capital below 6%): the German bank Hypo Real Estate, five Spanish savings banks (Banca Cívica, Banca Espiga, Caixa Catalunya, Unimm and Cajasur) and the Greek bank ATEBank. These banks must now carry out a recapitalisation. Like the Slovenian bank Nova Ljubljanska Banka, other financial institutions may announce a recapitalisation even if they were successful in the test. According to the CEBS, the cumulative losses that the banks tests would suffer would be in the region of 566 billion euros for 2010 and 2011.
The European Central Bank, the European Commission and the CEBS have issued a press release in which they welcome the results of the European “stress test”, which “confirms the overall resilience of the European banking system to negative financial and macroeconomic shocks and are an important step forward in restoring market confidence”. They call upon the seven banks which failed the test to “take the necessary steps to reinforce their capital positions through private-sector means and by resorting, if necessary, to facilities set up by Member State governments, in full compliance with EU state-aid rules”. The press release went on to stress the efforts towards transparency made by the economic operators, which publish data on their level of capitalisation with regard to the scenarios envisaged and their exposure to the sovereign debt of the countries of the EU and the EEA. Aside from its impact on confidence, this substantial European project should also mollify the ECB, which has been called upon to intervene in order to lessen tension on the inter-banking market.
The test, which focused on the years 2010 and 2011, considers two hypotheses: - a sharp decline of the economy (drop of 3 points of GDP compared to the economic forecasts of the EU for 2010 and 2011); - a deterioration of the sovereign debt markets of a similar scale as the height of the Greek sovereign debt crisis in May 2010. Any bank which keeps a certain level of own capital (“Tier One” capital above 6%) will sail through the test. Of the 91 banks from twenty Member States there were 27 Spanish banks, 14 German ones, 6 from Greece, 5 from Italy, 4 from the UK, 4 from France, 4 from the Netherlands, 4 from Portugal, 2 from Austria, 2 from Belgium and 2 from Ireland. The banks tested represent 65% of the banking assets held within the EU. (M.B./trans.fl)