The core equity tier 1 (CET1) ratio of EU banks on a fully loaded basis, which includes only capital of the highest quality, now is 13%, more than double the same ratio in 2011.
The European Banking Federation, as representative body for 32 national banking associations in Europe, takes note of the publication by the European Banking Authority (EBA) of its 2016 European Union-wide stress test.
The EBA test is a regular, technical check on the resilience of the European banking sector. Its exercise tested 51 European banks and covered approximately 70% of all banking assets in the EU.
The results clearly demonstrate that the recapitalisation effort that European banks have made in recent years is bearing fruit. Even after the Comprehensive Assessment at the end of 2014 European banks have continued to strengthen their balance sheets. The EBA stress test makes clear that the EU banking sector as a whole is able to withstand a severe economic downturn like the one that EBA simulated.
“This test has demonstrated that the European banking sector is resilient. Our banks continue to make significant efforts to shore up their balance sheets. Compared to five years ago, the ratio of highest-quality capital of European banks is now more than twice” said Wim Mijs, Chief Executive at the EBF.