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February 1, 2023

25 European banks fail ECB’s and EBA’s stress test

Romanian subsidiaries have solid financial situations (BNR)

Twenty-five European banks have failed the tests concerning their capacity to handle a new economic crisis, having a cumulated capital deficit of EUR 25 bln, the European Central Bank (ECB) announced on the occasion of the publication of the stress tests the main 130 European banks were subjected to.
All large European banks have passed the stress tests. The failures were mainly concentrated among the ranks of Italian banks (9 banks which failed the tests), but also of the Greek and Cypriot banks (3 banks each). The list of banks which failed the tests also included two banks from Belgium, two from Slovenia, and one bank each from France, Germany, Austria (Volksbanken), Ireland and Portugal. In the case of the Italian banks, Banca Monte dei Paschi di Siena SpA, the third-largest Italian bank, has the highest capital deficit to cover, EUR 2.1 bln.
Five of the banks that did not pass the stress test are also present on the Romanian banking market, namely Volksbank, Eurobank (owner of Bancpost), Piraeus, National Bank of Greece (who owns Banca Romaneasca) and Veneto Banca (the Italian group which controls the subsidiary of the same name).
Nicolae Cinteza, director of the National Bank of Romania’s (BNR) Supervisory Directorate, states that the local subsidiaries of the banks that were subjected to the stress tests have no kind of problems. The Central Bank official explained that the indicators of the financial institutions present in our country surpass by far the minimum mandatory level, both in the case of the basic scenario but also in what concerns the opposite scenario.
Capital adequacy ratios of local banking groups subject to stress tests, higher than regulated thresholds
The capital adequacy ratios of the subsidiaries of the banking groups operating on the Romanian market, included in the assessments conducted in Europe, are higher than the regulated thresholds, the National Bank of Romania (BNR) announced on Monday in a press release. The central bank also announced the results of the stress tests conducted nationwide, showing that the banks in the system have a comfortable level of the capital adequacy indexes.
‘The results of the stress tests conducted by BNR for the local banking system, recently released as part of the Report on Financial Stability (based on a scenario of severe economic recession and high depreciation of the national currency over the next three years) show a comfortable level of the capital adequacy indexes, falling within the limits regulated worldwide,’ the BNR release reads.

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