Four promoted and only one rejected among the major Italian banks in the stress tests of the EBA (the European banking authority) which subjected the 51 main credit institutions of the Old Continent to a particularly severe and in many ways questionable examination on their stability in case of adverse economic scenario.
In the EBA tests, communicated overnight with markets closed, only the Monte dei Paschi among Italian banks it did not make it: its Cet1 (i.e. the ratio between the best quality capital and loans) would drop, in the event of an adverse economic scenario, from 12,01% in 2015 to -2,23% in 2018 and -2,44% in 2019. A fall in Cet1 of 14,23% which qualifies the Sienese bank's performance as the worst in Europe but to which Monte dei Paschi immediately responded with a leap of kidneys represented by its new plan which envisages a capital increase of up to 5 billion euro without public aid and the total deconsolidation of the non-performing portfolio at a price of 9,2 billion euro which brings it back in line with the average for European banks.
Overall, according to the opinion of the Bank of Italy, Italian banks have shown "good resilience" with an aggregate Cet1 in very adverse conditions of 7,7% against 7,3% of Austrian banks, 7,5 % of Irish, 8,5% of British, 8,6% of Spanish, 9,5% of German and 9,4% of French. The Bank of Italy itself considers the exercise to which the Sienese bank was subjected "particularly severe and penalising".
Intesa Sanpaolo went very well, among the best in Europe, Banco Popolare and Ubi did well, Unicredit did the same and Mps badly. For this reason Unicredit, which would have a Ct1 of 7,12% in 2018 in adverse conditions, immediately asked the ECB if it believes that new managerial interventions and changes to the bank's capital plan are needed.
The ECB itself underlines that European banks are "more resilient" than what emerged in the 2014 stress tests and that "expectations in terms of regulatory capital requirements will remain overall stable compared to 2015". On Monday the word returns to the market.
