European Union banking stress test exercises

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A European Union-wide banking stress test exercise has been conducted by the Committee of European Banking Supervisors every year since 2009. The second instance was performed in July 2010. The third was carried out with results published in July 2011. The Council of the European Union (in its economic and financial – ECOFIN – configuration) mandated that Committee so to do, in the aftermath of the global financial crisis which started in 2007.

2011 results

The results for the 2011 exercises were published on 15 July.^[1] Eight out of 90 banks failed the test—five in Spain, two in Greece and one in Austria.^[2] Spain also is one of the leading countries in the list of approved banks (20), because it put up almost all of its financial sector (95 percent, against an average of about 60 percent).^[3]

The test is controversial, because Spain and Germany have complained the stress tests excluded dynamic provisions recognized by local regulators.^[4] In fact, a German bank didn't pass the test but they refused to publish its data and therefore it is not included in the official list.

Summary of 2010 results by bank

The 2010 test was the second of its kind, which assesses the financial strength of European banks under different adverse scenarios. This was done in cooperation with the European Central Bank, the European Commission and the national supervisory authorities of the member states.

The 2010 results were released on 23 July 2010.^[5] Of the 90 banks tested, 7 failed the 6 % tier 1 capital ratio threshold: five in Spain (Unnim, Diada, Espiga, Banca Cívica, and Cajasur), one in Germany (Hypo Real Estate), and one in Greece (ATEBank).^[6]

• MEUR = million euros
• Assets = total risk-weighted assets
• Benchmark = tier 1 ratio with benchmark scenario at 31 December 2011
• Adverse = tier 1 ratio with adverse scenario at 31 December 2011
• Shock = tier 1 ratio with additional sovereign shock on the adverse scenario at 31 December 2011
• Additional capital needed = additional capital needed to reach 6 % tier 1 ratio under adverse scenario at 31 December 2011

See also

• European System of Financial Supervisors
• Supervisory Capital Assessment Program, a similar exercise in the United States of America

References

External links

• CEBS press release on the stress tests
• Joint press release by the CEBS, the ECB, and the European Commission on the stress tests
• Summary report of the stress tests
• Results of the 2010 European Union banking stress test exercise
• OECD: The EU Stress Test and Sovereign Debt Exposures