EU stress test shows that the world’s oldest bank will fail amid economic shocks


Bank stress test update

According to the European stress test, the capital of Siena Bank, the world’s oldest bank, will disappear in a severe economic recession, and the performance of Deutsche Bank and Societe Generale will be relatively weak.

In the worst-case scenario tested by the European Banking Authority, the ratio of MPS’s common stock to risk-weighted assets fell from 9.86% to minus 0.1%, effectively making it insolvent.

The regulator used a scenario where the EU’s GDP fell by 3.6% and the unemployment rate reached 12.1% to test the performance of the bank’s balance sheet.

The Italian government that rescued MPS in 2016 Exclusive talks On Thursday, UniCredit sold part of the troubled bank’s business.

When UniCredit’s CEO Andrea Orcel discussed the potential transaction of MPS on Thursday, he said that any acquisition should not affect UniCredit’s common stock Tier 1 capital status. “No matter what impact we will have when we put these two parts together, our CET1 needs to remain at the same level as before,” he said.

UniCredit performed much better in the stress test, with its CET1 ratio dropping from 15.14% to 9.22%.

In this case, the balance sheets of other large banks deteriorated sharply. The capital ratio of Deutsche Bank dropped from 13.63% to 7.43%, and the capital ratio of Societe Generale dropped from 13.16% to 7.54%.

Although the EBA failed or failed the stress test on bank balance sheets, the results are important because regulators use them to calculate whether banks need to increase capital and how much dividends they can pay.

The overall results show that even in the worst “long-term low price” scenario of EBA, the industry’s common stock Tier 1 capital ratio will remain slightly higher than 10% on average, lower than the current 15%.

EBA Chairman José Manuel Campa told the Financial Times: “The industry needs to be cautious and cautious when assessing their positions in Covid-affected industries and specific counterparties. Early identification The potential deterioration of credit quality is very important.”

He added: “The resilience of the industry is high in all countries, but we do see a greater impact on banks that rely more on credit portfolios.”

Javier García, partner of Oliver Wyman’s financial services business, said: “It feels like realizing that we are slowly returning to normal. This does not mean [we will avoid the] A wave of potential defaults is going through the books of account. But it feels like the worst has passed. As the bank’s financial performance emerged in the first half of the year, the special measures seemed to have worked. ”

The overall resilience results are widely expected, especially after Andrea Enria, the head of supervision of the European Central Bank and former chairman of the EBA, told members of the European Parliament in early July Raise its hat Regarding the dividends and share repurchases of Eurozone banks.

These restrictions were implemented last year to protect bank balance sheets during the peak of the coronavirus pandemic.

This year’s stress test was originally scheduled to take place last summer, but it was postponed for 12 months due to the pandemic.


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