2011 EU wide stress test results: 8 failures, 16 near failures

8 banks out 90 banks fail: Five in Spain, two from Greece and one from Austria (Spain’s CAM, CatalunyaCaixa, Banco Pastor, Unnim & Grupo Caja; Austria’s Volksbanken; Greece’s Eurobank & ATEBank). One additional bank, Helaba, the German Landesbank, has pulled out at the last second after also failing.

I know that Banco Pastor has a major presence in Portugal and Volksbank is active in the CEE region.

The press release embedded below.

The most important part of the press release reads as follows:

The 2011 EU-wide stress test results show that:

  • At the end of 2010, twenty banks would fall below the 5% Core Tier 1 Ratio (CT1R) threshold over the two-year horizon of the exercise. The overall shortfall would total EUR 26.8 bn.
  • Between January and April 2011, a further net amount of some EUR 50 bn of capital was raised.
  • Taking into account these capital raising actions implemented by end April 2011
    • Eight banks fall below the capital threshold of 5% CT1R over the two- year time horizon, with an overall CT1 shortfall of EUR2.5 bn.
    • Sixteen banks display a CT1R of between 5% and 6%.

On the basis of these results, the EBA has also issued its first formal recommendation stating that national supervisory authorities should require banks whose CT1R falls below the 5% threshold to promptly remedy their capital shortfall. The EBA notes that this is not sufficient to address all potential vulnerabilities at this point. Therefore, the EBA has also recommended that national supervisory authorities request all banks whose CT1R is above but close to 5%, and which have sizeable exposures to sovereigns under stress, to take specific steps to strengthen their capital position. These would include, where necessary, restrictions on dividends, deleveraging, issuance of fresh capital or conversion of lower-quality instruments into Core Tier 1 capital.

If I have more, I will post it.

UPDATE 1 at 1227PM ET: Having noted Volksbank, I see they have a press release in German responding to the results.

The Austrian Volksbank AG (ÖVAG) has participated in the EU-wide stress test of the European Banking Authority (EBA)… ÖVAG is well capitalized and meet all currently applicable requirements pursuant to the BWG. The Tier I ratio has been increasing steadily since 2009…

ÖVAG CEO Gerald Wenzel: "The result of the stress test is not satisfactory and we take it seriously, of course. At the same time, the EBA publication shows us to be on the right track, with a reported Tier 1 capital of 9.8%  after implementation of the [capital-strengthening] measures. The Board has already started last year with a clear plan to initiate and implement appropriate measures to strengthen its capital.

This sounds like denial. I will dig further.

Update 2 at 1236PM ET: I understand from a link I posted last night that the Spanish government was not able to get CAM re-capitalized after a proposed merger collapsed. The government have now become majority shareholder (link in Spanish).

capitalEuroperegulationsovereign debt crisisstress tests