` – Intesa Sanpaolo was ‘promoted’ to the EBA stress tests, as well as Unicredit, Banco Bpm and Mediobanca, while the Monte dei Paschi was the worst among the 50 European banks examined in the exercise of authority. In particular Intesa Sanpaolo, in the adverse scenario, it would see its Cet1 drop to 10.06% at the end of 2021, to 9.66% at the end of 2022 and to 9.38% at the end of 2023. Mediobanca among the Italian banks, it would be the one to maintain the highest coefficient even in the event of economic shocks: at full capacity, by 2023, it would be equal to 9.73% in the adverse scenario. Always in the same situation that of Unicredit it would stand at 9.22%. Banco Bpm’s result was worse: the institute’s Cet1 would drop from 13.23% at the end of 2020 to 7.01% at the end of 2023. For Mps in 2023, Cet1 would even be negative, at .0.1%.
Overall, thethe impact of a “very adverse” scenario would lead the 50 largest European banks to burn 265 billion of capital in a three.year period– Even in this case, however, the EBA reports, the institutions would maintain a Cet1 above 10%. This year’s stress test is characterized by an adverse scenario that assumes a prolonged Covid.19 scenario in a context of “lower for longer” interest rates, recalls the EBA. In detail, the simulation predicts a cumulative decline in GDP over the three.year horizon of 3.6% in the EU, and a cumulative negative decline in the GDP of each Member State. In this context, the EU banking system as a whole would see its Cet1 reduced by 485 bps on a fully loaded basis (497 bps on a transitional basis) after three years, while remaining above 10% on average.
The main risk factors that would impact on banks’ equity would be losses on credit risks for 308 billion euros (equal to .423 basis points of Cet1), losses from market risk, including counterparty credit risk, for 74 billion euros (.102 basis points) and operational risk losses of 49 billion euros (.68 basis points). On this occasion theo Eba stress test did not have a ‘pass / fail’ scenario with defined thresholds, but was nevertheless intended to provide an important input for the assessment of banks under the pillar by their supervisors. “The results of the stress test will help competent authorities assess banks’ ability to meet prudential requirements applicable in the stress scenario and will provide a solid ground for discussion between the supervisor and individual banks on their capital and distribution plans, in the context of the normal supervisory cycle “, observes the EBA.