Andrea Enria, Chairperson of the European Banking Authority said: “Our work in strengthening the capital base of banks is proceeding to plan. European
banks are now in a stronger position, which should support lending to the real
economy and gradually restore banks’ access to market funding. Significant challenges
remain to exit the crisis and comply with the new regulatory standards approved
by the G20, but this was a necessary and important step in the process of repairing
banks’ balance sheets across the EU”.
The overview of banks’ measures taken to establish capital buffers so as to achieve
a CT1 ratio of 9% after prudent valuation of sovereign exposures highlights the
following:
-
The exercise led to an aggregate €94.4bn recapitalisation for 27 banks – largely
exceeding the €76bn shortfall identified in December - and to a significant restructuring
of the remaining 4 banks (See note 1).
-
Compliance with the Recommendation has been achieved mainly via measures which
have a direct impact on capital (retained earnings, new equity, and liability
management), with an amount of €71.6bn representing 95% of the initial shortfall
and 76% of the total measures.
-
In line with the Recommendation, the exercise did not lead to reduced lending
to households and corporate or to fire sales of assets. The deleveraging measures
agreed as part of the capital plans led to an overall reduction of RWAs by only
0.62% compared with the September 2011 aggregate RWAs. Moreover, those measures
were concentrated on a small number of banks that have agreed this reduction with
international and EU organisations in the framework of formal restructuring and
state aid injections.
As agreed by the European Council on 26 October 2011, for those banks unable
to meet the set target using private sources, backstops measures are now being
implemented with clear commitments from national governments and, where necessary,
EU or international support.
Process
The approval and monitoring of the implementation of banks’ plans were undertaken
by National Supervisors in coordination with the EBA. Plans were discussed in
Colleges of supervisors to ensure focus was placed on capital measures and on
limited reduction in lending to the real economy. This allowed for dialogue about
potential concerns regarding exposure levels of banking groups to their subsidiaries
in all Member States.
Next steps
This overview report is based on preliminary updates as of the end of June on
the capital plans provided by the National authorities. The EBA will publish a
final report on the exercise in September 2012 based on banks’ actual capital
positions as at the end of June 2012. The final report will provide information
on a bank-by-bank basis.
The EBA and the National Supervisors will continue to monitor the fulfilment
of the Recommendation for all banks included in the sample. Where necessary, National
Supervisors may undertake a detailed review of individual bank’s asset quality
to better understand the risks underlying banks’ capital positions in a deteriorating
environment.
The Recommendation will remain into force until rescinded and work is currently
underway to map the transition to the future regulatory framework (CRDIV). The
key principle for this transition will be to ensure capital conservation in 2013
and beyond.
Note to the editors
