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    25 EU Banks Fail ECB Financial Resilience Exam With $31.68 Bln Capital Shortfall

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    Capital shortfall of 25 million euros ($31.68 billion) has been revealed in 25 banks of European Union.

    Updated 3:33 p.m. Moscow Time

    MOSCOW, October 26 (RIA Novosti) - The results of two overlapping stress tests by the European Central Bank (ECB) and the European Banking Authority (EBA) have revealed a cumulative capital shortfall of some 25 billion euros ($31.68 billion) at 25 banks.

    “The comprehensive assessment — which consisted of the asset quality review (AQR) and a forward-looking stress test of the banks — found a capital shortfall of 25 billion euros at 25 banks,” the EBA said in a statement posted at its official website.

    The reviews were published separately by ECB and EBA, Eurozone’s two financial regulators.

    The ECB in-depth examination of 130 EU banks, carried out throughout 2013, showed that 12 of the 25 banks had covered their capital shortfall by increasing their capital by 15 billion euros ($19 billion) in 2014. The regulator gave the rest of the banks two-week time to prepare capital plans and nine months to cover the capital shortfall.

    The EBA, which ran its 2014 financial-health exam on 123 European banks, warned that banks with shortfalls could fall below the 5.5% CET1 threshold under the adverse scenario. It also attributed the revealed capital shortfall of 24.6 billion euros to credit risk losses and an overall impact of the adverse macroeconomic scenario.

    The examinations were carried out EU-wide in coordination with the European Systemic Risk Board (ESRB), the European Commission and all competent authorities across the Eurozone. The goal was to assess the resilience of EU banks so as to understand their vulnerabilities, complete the “repair” of the EU banking sector and increase confidence.

     

    Tags:
    Eurozone, banks, economy, European Banking Authority, European Systemic Risk Board, The European Central Bank (ECB), European Union, European Central Bank
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