Comparison results stress test taken earlier state aid for banks

As part of its ongoing monitoring of developments in relation to the banking union, the Netherlands Court of Audit has taken a closer look at the relationship between state aid granted to banks in EU member states and the findings of the ECB’s recent Comprehensive Assessment (CA). The comprehensive assessment is a one-off exercise (at least for the time being) and has created a great deal of transparency about the capital positions of the Eurozone banks. A summary of the findings follows below.

Data

  • Using publicly available information, we can build up a picture of the amount of state aid received by European banks (both significant and non-significant). Click here to access European Commission data on state aid provided to banks.
  • The ECB presented the findings of the CA on 26 October 2014 (click here). A total of 130 ‘significant banks’ (including seven Dutch banks) were covered by the ECB’s comprehensive assessment.

Findings

Combining the available data on the 130 significant banks produces the following picture:

No state aid

State aid

Total

Passed

85

20

105

Failed

16

9

25

Totaal

101

29

130

The table shows that 25 significant banks failed at least one of the components of the comprehensive assessment. Of these, 12 have redressed their capital position by the time the results of the CA were published.

  • 9 of these 25 banks already received state aid in the past.
  • 16 of these 25 banks did not receive any state aid in the past.

These 25 banks were obliged to submit a capital plan to the Joint Supervisory Teams (JSTs) by 10 November 2014. The JSTs (which operate under the aegis of the ECB) are responsible for assessing the adequacy and credibility of these plans. The plans have not yet been published or presented on the regulator’s website.

Over the coming months, the 25 banks will be taking measures to effectuate their capital plans. Those banks that failed the asset quality review (AQR) or the baseline scenario of the stress test have 6 months in which to take action, while those banks that failed the adverse scenario of the stress test have 9 months in which to do so. The JSTs will be keeping track of the progress made by the banks in implementing their plans. We do not know at present whether any progress reports will be presented to Parliament and, if so, what form these will take.

All the Dutch significant banks that took part in the ECB’s comprehensive assessment passed the tests, including the three banks to which state aid had been provided.