articles | 13 October 2014

ECB says stress test results on October 26, 2014

The European Central Bank has announced that it will publish the results of 130 European banks’ asset quality review on October 26, 2014.

These include Bank of Cyprus, Hellenic Bank, RCB Bank and the Cooperative sector, all of which have raised fresh capital and improved their liquidity ratios.

The European Banking Authority will issue the results of its EU-wide stress test on the same day, the ECB said on Friday. “The results will distinguish between capital shortfalls identified in the AQR and those identified under the baseline and adverse scenarios of the stress test”, it added.

It continues to highlight that “they will also contain important additional information such as the capital market issuance already undertaken by the banks in 2014”.

In addition to the bank-by-bank findings, the ECB will publish an aggregate report on the full outcome of the exercise for all banks.

The banks will, “where necessary, have two weeks to submit capital plans to the ECB, detailing how shortfalls will be covered”, a press release said.

Bank of Cyprus recently underwent a €1.1 billion capital increase, with about €800 million of that already repaid to the Emergency Liquidity Assistance (ELA) programme of bailout funds. As a result, strategic investors such as the EBRD and fund manager Wilbur Ross will have a controlling stake in the bank.

The Hellenic Bank, until recently controlled by the conservative Church of Cyprus, raised some €100 million in fresh capital from New York-based fund Third Point, online operator and local fund Demetra.

RCB Bank, formerly the Russian Commercial Bank of Cyprus, is wholly owned by the Russian VTB Group and enjoys full support from the mother bank, even though it appears to be the second most capitalised bank on the island in terms of deposits.

Finally, the Cooperative Central Bank, bailed out by the government of Cyprus to the tune of €1.5 billion in exchange for a 99% control, owns the network of Cooperative Savings Institutions on the island that are undergoing a major reform due to their high exposure o non-performing loans (NPLs), similar to almost all banks on the island.

Source: Financial Mirror

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