Eight European banks do not pass the stress tests

Eight European banks did not pass the stress tests for stability during a possible recession, reported news agencies, citing the London-based European Banking Authority. An Austrian bank, five banks from Spain and two from Greece. They will have to raise € 2.5 bn in order to strengthen their financial positions.

The five Spanish banks are: Mediterraneo - CAM, CatalunyaCaixa, Unnim, CajaTres and Banco Pastor. The Greek Eurobank EFG, owner of Postbank Bulgaria, and Ate are among the institutions that failed as well. Austrian Volksbank was also not successful. Bank executives from Volksbank criticised the banking regulator that it had not taken under consideration the measures that they had taken to increase the capital of the bank, including sales of international assets to the Russian Sberbank.

The results are more optimistic than expected, as preliminary estimates indicated that between 5 and 15 banks would not cope with the tests and would need some €10 bn. A total of 91 financial institutions from 21 European countries were inspected. They manage 65% of the assets of the Eurozone’s banking system.

Besides the financial institutions that failed, another 16 banks were close to not complying with the requirement for a 5% share capital (Tier 1). Another banking group that operates in Bulgaria - Piraeus Bank was among these. Following the negative scenario, it is expected to remain with 5.3% share capital and even having passed the test, by April 2012, it has to meet additional requirements. The Greek National Bank and Alpha Bank (both operating in the country), and Hellenic Postbank passed successfully.

The parent bank of the largest Bulgarian bank, UniCredit Bulbank, has achieved a primary capital adequacy of 6.7%, given the required 5%. By comparison, at the end of 2010, the respective index stood at 7.8%. "We appreciate the results of the European stress tests for 2011, which confirmed the capital adequacy of UniCredit," said Federico Ghizzoni, CEO of UniCredit. Should the less expected adverse scenario develop, the Group has a large buffer, compared to the regulatory required minimum level.

Hungarian OTP, owner of DSK, achieved one of the highest results - 13.6%. The owner of UBB, the National Bank of Greece recorded 7.7%. Raiffeisen International reached 7.8%, and the Belgian KBC, owner of CIBANK - 10%.

Spain recorded the worst results among Eurozone member-states - 7 more banks which hardly passed the tests but the largest number of audited institutions was there.

Half an hour after the results were published on Friday night, the Bulgarian National Bank (BNB) issued a press release, which stated: "The findings of the tests are that both banks and banking groups in Bulgaria subject to the audits and the other banks in our country have much higher capital adequacy than the minimum levels required in the tests The adequacy of the initial capital of the banking system in Bulgaria is 15.4% and the total capital adequacy ratio is 17.7%., as the data, regularly published by BNB, on the state of banking system show. "

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