The European Banking Authority (EBA) has just published the results of this year’s bank stress test. A total of 25 of the 48 banks are losing so much equity that they are unable to pay any more dividends. Of the 8 German banks tested, 6 are below this critical threshold. Landesbank Baden-W\u00fcrttemberg has crossed this threshold by a hair’s breadth. Only the development bank \u201cNRW-Bank\u201d can manage it without any problems.<\/p>\n
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MEP Sven Giegold, financial and economic policy spokesperson of the Greens\/EFA group commented:<\/p>\n
“The poor performance of large German banks is frightening. The German banks score particularly badly in the stress test, worse than banks in Italy or Spain.<\/p>\n
The EBA defines stress as a normal major recession. The European Banking Authority did not even test a severe financial crisis like the one in 2008. Nor has it tested any sovereign debt crisis in Italy, no chaotic Brexit scenario, no contagion effects from the failure of a very large bank, no over-hard interest rate shock. It is very plausible that the things tested will happen in the next major recession.<\/p>\n
The stress test proves that Europe’s banks still have too little equity. There is really no question of bank supervisors imposing too stringent capital requirements. Even with a medium economic crisis, many banks in Europe would hardly be in a position to support the economy with new loans. The lobby-driven warnings of excessively high capital adequacy requirements are not in line with reality. Europe should therefore now insist that the so-called Countercyclical Capital Buffer (CCyB) is now fully activated in all countries with a good economy, such as Germany. Here the ECB is called upon to intervene in a coordinating manner.<\/p>\n
It is incomprehensible that the results of the EBA’s stress tests were published, but not the results of other 54 ECB-internally audited banks. Here, fair competition and market transparency are prevented by banking supervision.<\/p>\n
It remains a stale aftertaste that it is the ECB itself that determines the conditions of the adverse scenario. A steep rise in interest rates was not stressed, nor was a severe real estate crisis. Once again, the ECB has spared itself from a public inquiry into the side effects of its lax monetary policy.”<\/p>\n
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Background.<\/strong><\/p>\n NordLB is by far the weakest bank in the adverse scenario of the stress test, both in terms of risk-weighted assets (RWA) and of the unweighted balance sheet (leverage ratio).<\/p>\n RWA (regulatory minimum is 10.5%): 7.1%<\/p>\n leverage ratio (regulatory minimum is 3%): 1.9%<\/p>\n <\/p>\n Among the four banks that perform worst according to RWA in the adverse scenario of the stress test are two German banks, NordLB (7.1% RWA) and Deutsche Bank (8.1% RWA).<\/p>\n Furthermore, only a total of three banks have less than the minimum leverage ratio required in the adverse scenario of the stress test. All three are German banks:<\/p>\n NordLB 1.9%; Deutsche Bank 2.8%; Bayerische Landesbank 2.8%<\/p>\n","protected":false},"excerpt":{"rendered":" The European Banking Authority (EBA) has just published the results of this year’s bank stress test. A total of 25 of the 48 banks are losing so much equity that they are unable to pay any more dividends. Of the 8 German banks tested, 6 are below this critical threshold. Landesbank Baden-W\u00fcrttemberg has crossed this […]<\/p>\n","protected":false},"author":36149,"featured_media":35751,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[],"class_list":["post-38545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n