The focus was on Italy and the results were far from what the market expected.
Yesterday, the European Banking Authority (EBA) presented the results of stress tests conducted on European banks which determined that the world’s oldest bank, Italy’s Monte dei Paschi di Siena (MPS), obtained the worst result, to exhibit a capital below the minimum required to dispel doubts about its solvency.
Analysts had informally set a basic approval mark of 5.5%, the threshold reached in the test From last year.
The company, which is the third largest in Italy, showed a negative ratio of -2.23%, giving support to the concerns of the authorities fear it could spread to the mainland or the other banking in the country, all of which reached a level of 7.7%.
Following the results, the European Central Bank (ECB), urged the MPS to reduce by about 30% the volume of doubtful loans to 2018. In doing so, they would rise from 46,900 million to 32,600 million euros .
In addition, the company received a proposal to clean up their finances by firms Intesa Sanpaolo and UBS aimed at reducing around 9,600 million volume of NPLs.
It should be recalled, shortly before knowing the results of tests of the EBA, the MPS approved a capital increase of 5,000 million euros and sales of 27,700 million in bad loans, a plan that has the approval of the ECB. Nevertheless, doubts about the Italian banking have led the government of Matteo Renzi to suggest the idea of injecting 40,000 million euros to the sector, however, that project would conflict with the new European regulation to rescue banks, as they required to be shareholders and creditors first assume the losses, before involving public capital.
this time, the EBA evaluated 51 large European banks with a minimum of 30,000 million euros in assets, while in 2014 it monitored the situation of 123 entities. In addition, this time not set a minimum capital threshold, so did not disclose notes of approval or suspense on each bank.
To examine the ability of entities in an adverse scenario, the EBA established a hypothetical recession in 2016 (-1.2%) and in 2017 (-1.3%), followed by growth in 2018 (0.7%).
the rest of Europe
the situation is far from the Italian bank thrown by the test for the rest of system in Europe.
the examination showed that his seat is at a healthy level, considering the adverse hypothetical scenario for the next three years.
Thus, in the case of Germany, its main banks, Deutsche Bank and Commerzbank, obtained a ratio of 7.8% and 7.42%, respectively. While the 10 entities analyzed in that country received a score of 9.5% overall. In the case of Spain, its banks posted a rate of 8.6%.
“The result demonstrates the resilience of the European banking sector in general, thanks to a significant increase in capitalization,” said the EBA in its report.
“The stress test EBA in 2016 shows how the benefits of improved capital made so far is reflected in the resilience of the European banking sector in the event of a severe shock,” he said the council president, Andrea Enria, adding that this was vital to accelerate the process of repair bank balance and restore the flow of loans to households and businesses test.
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