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The European Central Bank (ECB) and the EBA banking authority released their test results on Friday. These show how certain scenarios affect banks' balance sheets and the capital requirements of financial institutions.
48 banks from 15 countries in the EU and Norway have been examined in recent months. The stress test aims to ensure that banks do not tip over, even in the event of a severe recession, and have sufficient capital reserves.
Erste Group and Raiffeisen Bank International (RBI) have been audited in Austria. The Erste group undertook the stress test this year with a core capital ratio of 12.9%, compared to 12.25% in 2016. The Tier 1 capital ratio remains hypothetical after the severe stress of 2020 fall 4.4 percentage points to 8.5%. The RBI started with 12.7%, against 10.2% in 2016. In this case, the capital base ratio would fall by 3 percentage points, to 9.7% after the severe stress of this period.
On the right path
According to the two banks, the core capital ratios are higher than in the previous stress test of 2016. "The results of the stress tests show once again how important it was for Austrian banks to strengthen their capital. in recent years, "said Andreas Ittner, vice-governor of the Oesterreichische Nationalbank (OeNB). Nevertheless, they are still below average compared to other EU banks, the other banks having also increased their capital.
Klaus Kumpfmüller and Helmut Ettl, board of directors of the Austrian Financial Market Authority (FMA), state that: "The results also show that Austrian banks should not rely on the strength of the actions carried out by these companies. past years, but must continue to make great efforts to increase the capital base. "
Among the 48 major banks tested, the RBI 2018 went from the 25th to the 16th, while the first went from the 22nd to the 26th. The 48 banks tested – including 33 under the supervision of the ECB – account for 70% of bank badets in the EU and the euro area.
Generally more resistant
This time, banks in euros were tested on average with a core capital ratio of 13.7% (2016: 12.2%). Under significant stress, it fell to 9.9% (2016: 8.8%). The average capital destruction was therefore 3.8 percentage points. According to the ECB, it was 3.3 percentage points in 2016. According to the EBA, on average, 14% were at the beginning of the EU and 10.1% under severe stress at the end of the year. 2020, a decrease of 3.95 percentage points.
"The results confirm that the participating banks are more resilient to macroeconomic shocks than they were two years ago, and our banking operations have also helped them build a lot more capital while reducing their portfolios." nonperforming loans, as well as their internal controls and performance, risk governance has improved, "said Danièle Nouy, chair of the ECB's governing body. "Looking ahead, the test helps us identify the areas where banks are most vulnerable and the clusters of banks most sensitive to certain risks."
The hypothetical crisis scenario used by the EBA was severe: it simulated a sharp drop in economic growth, negative exchange rate and real estate price movements and very pessimistic badumptions about economic developments. in most countries, especially for Austrian banks. Central, Eastern and South-Eastern Europe (CESEE)
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