Eight European banks have failed The European Banking Authority
(EBA) stress test.
The eight lenders’ core Tier 1 Ratio fell below
the 5% threshold, with an overall capital shortfall of €2.5bn
($3.54bn).
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An additional 16 banks – with Core Tier
1 Ratios of between 5% and 6% – narrowly passed the test.
For this group of 16 banks, the EBA has
recommended that the national supervisory authorities request that
the banks take “specific steps to strengthen their capital
position.”
These would include, where necessary,
restrictions on dividends, deleveraging, issuance of fresh capital
or conversion of lower-quality instruments into Core Tier 1
capital.
The EBA will monitor the implementation of the
recommendations and produce progress reports in February and July
2012.
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By GlobalDataOf the eight banks to fail the stress tests,
five are based in Spain – Catalunyacaixa, CAM, Pastor,Unnim and
Caja3 – and two in Greece: ATE and Eurobank EFG.
Austria-based Volksbank also failed the stres test. Release of
the stree test results followed news that Volksbank was to sell its
Eastern European subsidiary to Sberbank in a deal worth around
€600m.
In all, the EBA stress tested 90 European
lenders.
Overall the sample of banks had an average
capital ratio of 8.9% at the end of 2010 or approximately €1trn of
which 95% was common equity.
