2023-07-28 20:02:12
The scenario used in this exercise, involving 70 institutions covering approximately 75% of banking assets in the European Union in the EBA study, provided in particular for a ” severe worsening of the geopolitical situation » et « an increase in commodity prices “, events likely to reduce the European Gross Domestic Product (GDP) by 6% in three years.
Added to this was a 6.1 point rise in the unemployment rate, a slower-than-expected fall in inflation, a fall in property prices and a collapse in 2023 of stocks on the financial markets.
Following such a shock, much more severe than in 2021 during the previous test, the equity ratio tough “, a key indicator for measuring financial soundness, would drop for the whole of the European banking sector from 15.2% to 10.4%, a level equivalent to that of two years ago and generally considered acceptable by the supervisors.
The EBA also noted an improvement in banks’ credit quality compared to the 2021 test, as well as higher profits, allowing institutions to withstand a much larger crisis.
French banks finish in last place
However, this level is an average, with the banks of four countries falling below the 10% mark: those of Spain, the Netherlands, Germany and France.
French banks even finish in last place, with a hard capital ratio of 9.15% at the end of these three years of turbulence.
This French average was however weighed down by the Banque Postale, which ended the year with a ratio of 0.05%. Societe Generale is at 8.19%, BNP Paribas at 8.35%, BPCE at 9.92%, Crédit Agricole at 9.94% and Crédit Mutuel at 11.43%.
« Given these cautious assumptions and this particularly degraded macroeconomic and financial scenario, the results of the stress tests confirm the resilience of the French banking system as a whole due to a good shock absorption capacity. “, welcomed in a press release the Prudential Control and Resolution Authority, the French policeman of the sector.
Deutsche Bank, whose health has raised concerns in the past, concludes the stress test at 8.08% hard capital, while the Italian bank Monte dei Paschi di Siena, which ended the previous financial year with funds own negatives of around -0.10%, did much better this time, with 10.13%.
This test, however, was not designed to determine whether a particular bank passed or failed. On the other hand, the data collected will be used by European banking supervisors to assess the capital needs of the banking institutions under their supervision in the coming months.
The financial year began at the end of January, just before the banking sector was jostled in the first quarter by the bankruptcy of American establishments and the emergency takeover of Credit Suisse by UBS.
In its test, which does not include Swiss institutions, the EBA does not include the psychological aspect with a bank panic phenomenon, as has been observed in recent months in certain institutions considered fragile.
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