The European Central Bank's comprehensive assessment, which consisted of an asset quality review and a forward-looking stress test of the banks, found a combined capital shortfall of about €25 billion at 25 banks.
The European Central Bank (ECB) has just published the results of its year-long examination of the resilience of the 130 largest banks in the euro area. The results show that 40 banks had only capital ratios of 7% or below during the test, which is the absolute minimum allowed under the new international banking rules known as Basel III.
The comprehensive assessment, which consisted of an asset quality review and a forward-looking stress test of the banks, found a capital shortfall of almost €25 billion at 25 banks. The ECB revealed that 12 of the 25 banks have already covered their capital shortfall by increasing their capital by €15 billion in 2014. The rest of the banks have up to nine months to cover the capital shortfall.
“This unique and rigorous exercise is a major milestone in the preparation for the Single Supervisory Mechanism, which will become fully operational in November,” said Vítor Constâncio, Vice-President of the ECB. “This unprecedented in-depth review of the largest banks’ positions will boost public confidence in the banking sector. By identifying problems and risks, it will help repair balance sheets and make the banks more resilient and robust. This should facilitate more lending in Europe, which will help economic growth.”
The asset quality review showed that as of end-2013 the book values of banks’ assets needed to be adjusted by €48 billion. Furthermore, the bank's non-performing exposures (any Obligations that are 90 days overdue, impaired or in default) increased by €136 billion to a total of €879 billion. The assessment also showed that a severe financial crisis scenario (3 years recession) would deplete the banks’ loss-absorbing Tier 1 capital, the measure of a bank’s financial strength, by about €263 billion. This would result in the banks’ median ratio decreasing from 12.4% to 8.3%, a higher higher than in previous similar exercises.
“This exercise is an excellent start in the right direction. It required extraordinary efforts and substantial resources by all parties involved, including the euro area countries’ national authorities and the ECB. It bolstered transparency in the banking sector and exposed the areas in the banks and the system that need improvement,” said Danièle Nouy, Chair of the ECB Supervisory Board. “The comprehensive assessment allowed us to compare banks across borders and business models, and the findings will enable us to draw insights and conclusions for supervision going forward.”
Cyprus Banks in Focus
The ECB results show that the €24.6 billion capital shortfall is proportionally highest in Cyprus, Greece, Portugal and Italy. In fact, three banks from Cyprus were included in the above mentioned list of twenty five and had a total capital hole of €2.4 billion. This will no doubt strengthen the ECB's pressure on Cyprus for structural reforms and fiscal consolidation.
Still, only one out of the four Cypriot banks that were examined by the ECB failed the stress test. This comes as mixed news to the Forex industry for which the European island serves as an established hub for years. Bank of Cyprus Public Company Ltd, Co-operative Central Bank Ltd and Russian Commercial Bank Ltd (RCB) passed the test. The fourth, Hellenic Bank Public Company Ltd, failed it and its board is reportedly meeting to discuss an additional equity issue, according to reports from the local media.
The European Central Bank (ECB) has just published the results of its year-long examination of the resilience of the 130 largest banks in the euro area. The results show that 40 banks had only capital ratios of 7% or below during the test, which is the absolute minimum allowed under the new international banking rules known as Basel III.
The comprehensive assessment, which consisted of an asset quality review and a forward-looking stress test of the banks, found a capital shortfall of almost €25 billion at 25 banks. The ECB revealed that 12 of the 25 banks have already covered their capital shortfall by increasing their capital by €15 billion in 2014. The rest of the banks have up to nine months to cover the capital shortfall.
“This unique and rigorous exercise is a major milestone in the preparation for the Single Supervisory Mechanism, which will become fully operational in November,” said Vítor Constâncio, Vice-President of the ECB. “This unprecedented in-depth review of the largest banks’ positions will boost public confidence in the banking sector. By identifying problems and risks, it will help repair balance sheets and make the banks more resilient and robust. This should facilitate more lending in Europe, which will help economic growth.”
The asset quality review showed that as of end-2013 the book values of banks’ assets needed to be adjusted by €48 billion. Furthermore, the bank's non-performing exposures (any Obligations that are 90 days overdue, impaired or in default) increased by €136 billion to a total of €879 billion. The assessment also showed that a severe financial crisis scenario (3 years recession) would deplete the banks’ loss-absorbing Tier 1 capital, the measure of a bank’s financial strength, by about €263 billion. This would result in the banks’ median ratio decreasing from 12.4% to 8.3%, a higher higher than in previous similar exercises.
“This exercise is an excellent start in the right direction. It required extraordinary efforts and substantial resources by all parties involved, including the euro area countries’ national authorities and the ECB. It bolstered transparency in the banking sector and exposed the areas in the banks and the system that need improvement,” said Danièle Nouy, Chair of the ECB Supervisory Board. “The comprehensive assessment allowed us to compare banks across borders and business models, and the findings will enable us to draw insights and conclusions for supervision going forward.”
Cyprus Banks in Focus
The ECB results show that the €24.6 billion capital shortfall is proportionally highest in Cyprus, Greece, Portugal and Italy. In fact, three banks from Cyprus were included in the above mentioned list of twenty five and had a total capital hole of €2.4 billion. This will no doubt strengthen the ECB's pressure on Cyprus for structural reforms and fiscal consolidation.
Still, only one out of the four Cypriot banks that were examined by the ECB failed the stress test. This comes as mixed news to the Forex industry for which the European island serves as an established hub for years. Bank of Cyprus Public Company Ltd, Co-operative Central Bank Ltd and Russian Commercial Bank Ltd (RCB) passed the test. The fourth, Hellenic Bank Public Company Ltd, failed it and its board is reportedly meeting to discuss an additional equity issue, according to reports from the local media.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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