July 29, 2021

The ECB will monitor "closely" the banks with the worst scores in the stress test, including BBVA and Sabadell

The ECB will monitor "closely" the banks with the worst scores in the stress test, including BBVA and Sabadell

The vice president of the European Central Bank (ECB), Luis de Guindos, said on Monday that the monetary authority will monitor "closely" those eurozone banks that last week obtained the worst results in stress tests conducted by the Authority European Banking (EBA).

In particular, Guindos has ensured that the 12 financial entities that registered a capital ratio of maximum quality CET1 lower than 9% in the stressed scenario will have special vigilance due to their "weak" position. This ratio brings together the company's own capital against the bank's risk-weighted assets.

"These entities, which account for 40% of the total assets of the sector in the eurozone, should increase their robustness and improve their capital positions to meet the challenges that are approaching and, therefore, will be closely monitored," he assured Sour cherries during a speech in Brussels.

Among the dozen banks with a result of less than 9% are the Spanish BBVA and Sabadell, in addition to the French BNP Paribas and Société Générale or the German Deutsche Bank.

The other two Spanish banks that participated, Santander and CaixaBank, achieved notes of 9.2% and 9.11% respectively, just above the bar marked by the ECB. Regarding the entities that reached ratios between 9 and 11%, where both are located, Guindos assures that these banks have reached a "reasonable degree of resilience" but that some of them need to further reduce their vulnerability.

The stress tests were carried out by the EBA, the banking supervisor in Europe. 44 entities participated, of which 33 were in the perimeter supervised by the ECB. The EBA is not a threshold to approve or suspend its examination, although the market, in the same way as in the previous stress tests, takes as a reference the strength of the entity a ratio of 5.5% of capital of maximum quality CET1 in the worst scenario.

No entity achieved a result below that figure. In fact, only three entities were below 7%: Lloyds (6.8%), BPM Bank (6.67%) and Barclays (6.37%).

"The high level of resilience of the banking system in the euro zone should not hide the fact that certain vulnerable areas remain," the Spanish banker warned, after indicating that the results of the banks supervised by the ECB have "improved" in comparison with the stress tests of two years ago.


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