On 30 July, the European Banking Authority unveiled the results of the latest stress-test. In the 2014 exercise, 123 banks were tested and 24 would have failed during a serious economic shock. The capital shortage was calculated at €25 billion. This year, the test encompassed 51 banks and there was no pass/fail grade, a fact criticized by many. In a simulated scenario of a serious economic shock, a big majority of banks had still a satisfactory capital ratio after the shock in 2018. The worst performer was the Italian Bank Monte dei Paschi di Siena. In case of a serious shock, it would end up with a negative capital ratio. To counter the bad news, the bank itself presented an emergency plan on the same day as EBA´s announcement. It is in line with the EU rules and would improve the bank´s performance. Meanwhile, Italian banking system is still the largest risk on the eurozone financial market, with many big banks having a high number of bad loans in their portfolios.
19th June 2018