ECB stress test results revealed

After testing Europe’s top 130 banks, the European Central Bank publicised the results of its landmark health check yesterday. Cyprus' three of four banks that participated in the stress test, Bank of Cyprus, Central Co-op and RCB, all passed the tests. The fourth, Hellenic Bank have failed with a shortfall of €176 million in capital.

ECB stress test results revealed

After testing Europe's top 130 banks, the European Central Bank publicised the results of its landmark health check yesterday. Cyprus' three of four banks that participated in the stress test, Bank of Cyprus, Central Co-op and RCB, all passed the tests. The fourth, Hellenic Bank have failed with a shortfall of €176 million in capital. Its Board of Directors are meeting to discuss an additional equity issue which needs to be resolved imminently.

The health check of banks across the European Union showed that a total of 24 lenders were too weak to withstand a three year recession. The test aimed at drawing a line under the single currency's area's protracted debt crisis. Three Greek banks, Eurobank Ergasias, National Bank of Greece and Piraeus Bank, had a combined shortfall of €8.7 billion. Many of the lenders have raised assets since 2013 and the total shortfall had been reduced to €9.5 billion across 14 lenders by the end of September 2014. The Eurozone banks now have two weeks to come up with contingency strategies in answer to any flaws uncovered within the next nine months, and any unable to meet this deadline risk facing closure.

The ECB inspected the balance sheets of participating banks ahead of the stress test, a higher sample as it also includes subsidiaries of big banks while the European Banking Authority test looked at group holding companies. At least 40 banks ended the test with capital ratios of below 7%, which is the minimum level required by Basel III, the new global banking regulations.


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