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Whether a bank passed the stress test was determined according to the resulting Common Equity Tier 1 (CET1) ratio under the baseline and adverse scenario. The definition of CET1 of the CRR/CRD IV (i.e. the implementation of Basel III in the EU) was applied. In order to pass the stress test, banks needed to clear the CET1 hurdle rates of 8% in ...
Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view. [note 1] It is composed of core capital, [1] which consists primarily of common stock and disclosed reserves (or retained earnings), [2] but may also include non-redeemable non-cumulative preferred stock.
These banks entered the process with an average Common Equity Tier 1 (CET1, i.e., percentage of Tier 1 capital held by banks) [22] ratio of 13%, higher than the 11.2% of 2014. The test showed that, with one exception, all the assessed banks exceeded the benchmark used in 2014 in terms of CET1 capital level (5.5%).
The bank also planned to recapitalize €1 billion in early 2016 (due to CET1 ratio was below ECB requirement, set at 10.25%% after 2015 Supervisory Review and Evaluation Process (SREP) [9]), as well as planning to list in the Borsa Italiana in mid-2016. As at 31 March 2016 the bank had a net assets per share of about €15.5, or €3 in ...
On 13 December 2016, despite the annual European Central Bank (ECB) Supervisory Review and Evaluation Process (SREP) lowed the CET1 ratio (transitional basis) requirement of UniCredit from 9.75% [31] to 8.75%, [32] the bank announced a massive €13 billion recapitalization of the bank, as well as €8.1 billion loan loss provisions and net ...
The bank also planned another capital increase of €1.5 billion (the CET1 capital ratio was just 6%, below ECB requirements of 10.25% following the 2015 Supervisory Review and Evaluation Process (SREP), as well as floats the shares in Borsa Italiana. [4] The bank wrote down €1.333 billion worth of customer loans in the 2015 financial year. [23]
Moreover, among the first 14 largest Italian banks that were supervised by the European Central Bank directly, [nb 2] they were required a higher CET1 ratio after Supervisory Review and Evaluation Process (such as over 10% CET1 ratio for BMPS). [24] and Banca Popolare di Vicenza [25]). In 2015 banks such as BMPS (for about €3 billion) and ...