The stress test by the European Banking Authority (EBA) shows an “enhanced stress resistance “of the banking system in the euro area since the last test in 2014. reported that the European Central Bank (ECB) in a press release. Belfius Bank and KBC have passed the stress test. Their results show that stress their resilience to shocks has improved since 2014. This has been reported to the National Bank (NBB).
The concerned by the EBA coordinated stress test of 51 banks in the European Union’s 37 main credit institutions directly from the ECB’s supervision, which together account for 70 percent of banking assets in the euro area. Those 37 banks started the stress test with Tier-1 core capital ratio (CET1), a measure of their capital buffer of 13 per cent, an improvement on the 11.2 per cent of the EU-wide stress test of 2014, according to the ECB.
In the worst scenario, which assumed a major economic crisis, the banks saw their capital on average by 3.9 percentage points. Yet they remain a CET1 ratio of 9.1 per cent on the whole still standing reasonable. With one exception allow all banks show a CET1 capital level is well above the 5.5 percent that was used in the worst scenario of the stress tests in 2014.
“The results show that the banks their capital the past two years have significantly strengthened and additional have repaired their balance sheets, “said Danièle Nouy, chair of the Board of Trustees of the ECB. “The banking sector today is more resilient and better able to absorb economic shocks than two years ago.”
“The results demonstrate the resilience of the European banking sector as a whole, thanks to a substantial recapitalization,” says EBA in its report.
Belgian banks
© photonews. 
© belga. KBC and Belfius both had been compared in a good position with the other major European banks that participated in the stress test. At the start of the stress test end of 2015, the Tier 1 core capital ratio (CET1), a measure of their capital buffer for KBC 15.2 percent and 15.9 percent for Belfius. The average CET1 ratio was 13 percent.
In the worst-case scenario of an economic crisis CET1 ratios of KBC and Belfius would drop to 11.3 percent and 11.4 percent respectively. “These rates are well above the average expected ultimate core Tier 1 capital ratios of 9.1 percent for the whole euro area,” the NBB said in a press release. Also, they are well above the threshold of 5.5 percent which was used in the worst scenario of the stress tests in 2014.
Unlike in 2014, there was the current stress test with no minimum threshold and she was confined to the 51 greatest players. After the test, then had 24 of the 123 surveyed banks for a total of 24.6 billion euros attract additional capital. The stress test of 2016 serves as a monitoring tool: the results are discussed within the SREP (Supervisory Review and Evaluation Process), the process of prudential assessment and evalulatie of supervisors
According to the NBB, the better starting positions and results. to thank the stress test on the adjustments to the banks since 2014, including strengthening the capital position and reduce debt. “The stress test results for KBC, Belfius that their resilience to shocks has improved since 2014. This is a welcome development in an environment that nevertheless continues to pose a challenge to the profitability of European banks.”
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Belfius and KBC are satisfied with the results of the test. “I am proud of the fact that Belfius managed to strengthen its very short-term capital position as substantial. This result not only confirms our strength today, but also our attention to continue building our resilience in light of the challenging macro -economic environment of tomorrow, “said Belfius CEO Marc Raisière that customers, employees and shareholders, thank you for the trust, commitment and long term vision.
CEO of KBC Group Johan Thijs welcomes the theoretical exercise of EBA, “which gives us additional insights on the capital requirements in different economic situations. the result of the exercise also provides a reassuring signal to all stakeholders have confidence that our institution is well capitalized. KBC will continue to ensure that capital remains at an appropriate level, “he says. “The results also show a strong foundation to KBC in the form of a wholesome, customizable bancassurance business model, a strong liquidity position supported by a very strong and loyal customer base (…) and a comfortable level of solvency, that gives us the opportunity to increase our lending to customers and actively to the communities and economies in which we operate to support. “
ING Belgium and Fortis , subsidiaries of foreign banking groups, participated in the stress test part through their parent institutions. They had a uitangspositie of 12.9 and 11.1 percent respectively. their CET1 ratio under the adverse scenario falls to 9 percent and 8.6 percent.
Reaction From Overtveldt
© photonews. Finance Minister Johan Van Overtveldt (N-VA) last night reacted with satisfaction the results of the Belgian bank KBC and Belfius. At the same time he calls for “continued and even strengthened vigilance.”
In a press release says Overtveldt that he was “pleased” establishes that the two Belgian systemic banks, KBC and Belfius, “excellent” score. “The extensive restructuring policy that these banks have had clearly paying off,” he says. “Both the profitability and financial stability of both banks looks strong. That’s good news for the economy as a whole. A strong economy needs a healthy financial sector.”
However, the minister also sees reasons for vigilance of regulators and senior management of the banks. “For the whole of the European banking sector is evident from the results of stress tests clearly that there is still considerable work to be done for the purpose of structural health. Moreover, the profitability of the banking sector as a whole these days extra under fire. This keeps economic growth develop hesitantly, while very low and even negative interest rates may still will be a time reality. Both phenomena weigh heavily on the profitability and solvency of the banks. the positive results of the stress tests should not be a reason for attention to weaken, on the contrary. ”
Poor report for Italian bank Monte dei Paschi
the Italian Banca Monte dei Paschi is the worst in the stress test of the European banking Authority. In a severe crisis, the bank would have already been eroded its entire share capital buffer, the EBA reports.
Earlier in the evening it became clear that the government has agreed with Banca dei Paschi with a capital injection by investors. This plan should allow the world’s oldest bank 5 billion in additional capital. This is intended to prevent the bank stifled by the many bad loans on its balance sheet.
dei Paschi want all those bad loans now amounting to a total of 9.2 billion hand do . Thus they provide only a third of the 27.7 billion that was originally borrowed.
The bank is already bad for years and saw another three-quarters of its stock market value evaporate last year by concerns about its future. In recent weeks examined the Italian Government the opportunity to prop up the bank with state aid. However, the Italian Ministry of Finance said that such controversial aid is no longer needed.
Monte dei Paschi was further announced that net income rose in the second quarter by 13 percent from a year earlier , to 209 million euros. The gain was due in part to a tax windfall and lower provisions for bad loans. Analysts had forecast on average a quarterly loss of 54 million euros for the bank.
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