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Two European Bank showed the worst result of stress tests of the EU 04.08.2016 at 14:42

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the European banking authority has published the results of stress tests of the Bank 51 of the European Union. The worst results showed two agencies — the Italian Banca Monte dei Paschi di Siena and the Irish Allied Irish Banks. The oldest Bank in the world Monte dei Paschi di Siena by 2018 may face negative capital adequacy. The ten most troubled banks according to the results of the study also included financial institution of the largest economies of the European Union: Austria, great Britain, Germany, France and Spain.

the Italian Banca Monte dei Paschi di Siena (BMPS) and the Irish Allied Irish Banks were the most troubled banks of the European Union, showed the stress tests the European banking authority (EBA), one of the financial regulators of the EU. Them adequacy ratio core capital 1 tier (CET1) in the complete basis can be lowered by 2018, below the required level controls 4.5%.

the Irish Allied Irish Banks CET1 may decline to 4.3%, while the Italian BMPS, the world's oldest Bank, and does go into the negative plane — to a minus of 2.44%. This figure is considered a key in determining the ability of banks to withstand shocks.

However, this will only happen in case of adverse economic development scenarios: recession in 2016-2017 at 1.2 and 1.3%, respectively, weak GDP growth of 0.7% in 2018 and a continued decline in oil prices.

In the case of the baseline scenario of economic development based on the macroeconomic forecast of the European Commission until 2018, all European banks participating in the stress test, the CET1 was at an acceptable level in excess of 4.5%.

In particular, the figure for the Italian BMPS will remain at an acceptable level of 12.24%, and the Irish Allied Irish Banks will be of 13.90%.

the Results of stress tests of the EBA was published an hour before midnight on July 29.

the study involved 51 banks from 15 countries of the European Union and the European economic area, which accounted for 70% of the assets of the banking system of the Union. Interestingly, in the stress test 2016 was not involved, neither the Bank of Greece or Portugal.

unlike the stress tests of 2014, when it was set to feed-through strap is a capital adequacy ratio of 5.5%, in the current study there was no assessment of "pass/fail". The stress test does not entail any regulatory decisions, but only shows various options for the development of the banking industry and is a kind of thought-provoking information.

the Other banks, which are among the ten with the lowest level of this indicator, steel Austrian Raiffeisen (6,12%), Irish Bank of Ireland (6,15%), the Spanish Banco Popular (to 6.62%), Italian Unicredit (7.1 per cent), British Barclays (7.3 per cent), German Commerzbank (7,42%), French Socete Generale (7,5%), Deutsche Bank (7.8 percent), Spanish Criteria Caixa (7,81%) and Austria's Erste Group (8,02%).

the Total volume of overdue loans all participants in the stress test exceeded €1 trillion.

"This is a big number", — concluded the Chairman of the EBA, Andrea Enria before publication of the research results. The third (360 billion) of all defaulted loans, the EU accounted for Italy.

"Level already started to decline in all countries. But the pace of adjustment. Is it as fast as we cut them? If it is done too fast, there arises a problem of large-scale asset sales and the impasse of the capital increase, and if you do it too slow, then the banks will not lend and will remain unprofitable for a long time."

Deutsche Bank to avoid the collapse of the

One of the banks the results of stress tests which had the attention of investors was the German Deutsche Bank. Recently, its U.S. subsidiary failed the stress test of fed. But the IMF report on the assessment of the stability of the financial sector, released in June of this year, says that among the largest banks from Deutsche Bank come the greatest risks to global Finance.

the flames were fanned stock traders vbros hearing that Deutsche Bank on the balance sheet derivatives whether in the $42 trillion, $73 trillion.

Since the beginning of the year, its stock fell by 46%, this is largely due to the potential impact of a British exit from the European Union.

But stress tests showed acceptable level of capital adequacy of Deutsche Bank even in the case of the adverse scenario. Markets immediately responded to these messages: after-hours trading, shares of the Bank rose by 1.5%.

"the Results from the major banks, including Deutsche Bank and UniCredit, was better than expected," — said in a conversation with Bloomberg Professor at Milan's Bocconi University, Carlo Alberto Carnevale Maffe. "A concern only BMPS, which needs urgent measures to replenish capital."

the Italian crisis

the results of the stress tests showed that the greatest risk, as suggested earlier, comes from the Italian banking sector.

the Bank Monte dei Paschi di Siena was the only financial and credit institution, the level of capital adequacy which will go into the negative zone in the adverse scenario of economic development.

On the problems of the BMPS has been known for a long time. Like other banks in Italy, it suffers from a large number of defaulted loans, consisting primarily of the mortgage and loans to small and medium enterprises — the main actors of the Italian economy. With the beginning of the year, the Bank's shares fell in price by almost 77%.

the Profitability of Italian banks has long been the worst in Europe due to a too large number of staff and extensive networks of branches. All I wasnt able to find enough funds to cover bad debts in the absence of rigorous evaluation procedures of borrowers.

Another weakness of the Italian banking sector — the judicial system. Often the collateral is the house of the business owner or the company itself, but due to complicated legal procedures the Bank is unable to recover the collateral for several years up to decades.

to Solve the problem with the capitalization of the Bank would massive injections of public money, but after the Cyprus crisis, the EU in 2014 passed a law that limits the state's ability to help banks and requires that investors also share the burden the debt burden of financial institutions.

"the Results of stress tests of banks show that there are still banks in the European Union, which are still not doing their homework. This applies in particular to Italian financial institutions", says Wolfgang Steiger, General Secretary of the Christian democratic Union of Germany, which is chaired by Chancellor Angela Merkel, according to Bloomberg.

a few hours before the publication of results stress-tests of the Italian Banca Monte dei Paschi di Siena announced the adoption of a rehabilitation plan, involving the sale of a package of non-performing loans amounting to €28 billion and raising €5 billion of additional capital through placement of shares or hybrid securities.

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