EBA's Board of Supervisors makes its first aggregate assessment of banks' capital plans

09 February 2012

The European Banking Authority's Board of Supervisors made a preliminary assessment of banks' capital plans. Their review highlights that, in aggregate, the shortfalls are expected to be met primarily through direct capital measures. EBA said it would undertake its next EU-wide stress test in 2013.

The Board of Supervisors undertook a preliminary overview of the proposed measures highlighting the following:

• the total actions give a capital surplus of approximately 26 per cent, creating some leeway in case some actions do not materialise;
• the actions predominantly focus on direct capital measures which account for 96 per cent of the capital shortfall and for 77 per cent of the total amount of actions proposed;
• after taking account of the measures arising from EU State Aid decisions on banks restructuring or other country programmes, the impact of actions reducing lending into the real economy would be less than 1 per cemt of the total amount.

The Board of Supervisors has not yet assessed the viability of the plans. In-depth analysis of these will be undertaken by National Authorities in close cooperation with the EBA and other relevant authorities in colleges of supervisors. The analysis will assess the credibility of measures, such as forecasts of retained earnings, the effectiveness of the process for the approval of new advanced models, and the reliability of assumptions underlying the planned disposal of assets and their geographical impact.

Banks should expect to receive clear guidance on their plans from National Authorities in early March, after which the EBA’s Board of Supervisors will continue to monitor the viability of the plans ahead of the June deadline. All National Authorities signalled their commitment to comply with the Recommendation using their supervisory powers.

Press release

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