The assessment—which consisted of an asset quality review and a forward-looking stress test of the banks—found a capital shortfall of €25 billion at 25 banks: 9 in Italy; 3 in Greece; 3 in Cyprus; 2 in Slovenia; 2 in Belgium; and 1 in Germany, Ireland, Spain, France, Portugal and Austria.
12 of the 25 banks have already covered their capital shortfall by increasing capital by € 15 billion in 2014. The remaining 13 must prepare capital plans within two weeks and will have up to nine months to cover the capital shortfall: 4 banks in Italy; 2 in Greece; 2 in Slovenia; 1 in Cyprus, Portugal, Ireland, Belgium and Austria.
The 130 banks included in the exercise had total assets of € 22.0 trillion, accounting for 81.6 percent of total banking assets. The assessment also showed that as of end-2013 the banks’ asset values need to be adjusted by €48 billion, as €37 billion of which did not generate capital shortfall and non-performing exposures increased by € 136 billion to a total of € 879 billion.
Vítor Constâncio, Vice-President of the ECB said that “this unprecedented in-depth review of the largest banks’ positions will boost public confidence in the banking sector. By identifying problems and risks, it will help repair balance sheets and make the banks more resilient and robust. This should facilitate more lending in Europe, which will help economic growth.”