© Reuters. Several Euro banknotes under a torn Eurozone flag. REUTERS/Dado Ruvic/
MILAN (Reuters) – Three European Union banks failed to meet mandatory capital requirements in stress tests conducted by the European Banking Authority (EBA) on 70 lenders, 20 more than in 2021, including 57 from the area. euro, representing around 75% of bank assets in the EU.
The names of the three banks that failed the capital requirements were not named.
In what the regulator described as its toughest test yet, it examined the impact of a three-year scenario to 2025 of losses due to credit, market and operational risk. The scenario called for a cumulative collapse in economic growth of 6% and a sharp decline in property prices.
“In an adverse scenario, all but three banks comply with the TSCR,” says the EBA.
Four banks failed to meet the mandatory leverage ratio requirement, a broader measure of the ratio of capital to total assets.
“For three of them the difference is minimal, while they meet the risk-based TSCR,” it reads.
The regulator said that in the third year of the test, 37 banks fell below the capital levels that trigger payout limits.
(Italian version by Giancarlo Navach, editing by Andrea Mandalà)