FRANKFURT (MNI) – The following is a verbatim text from the Bank of
Italy following the published results of the stress tests of five
Italian banks, all of which passed:

As part of an initiative promoted by the EU Economic and Financial
Affairs Council (ECOFIN), the Committee of European Banking Supervisors
(CEBS) and the national supervisory authorities of the member states
have conducted, with the collaboration of the European Central Bank and
the Commission, a stress test on the banking system of the European
Union. The aim of the exercise is to assess the solidity of the European
banking system and banks ability to absorb shocks to credit and market
risks, including those deriving from an increase in sovereign risk in
the European Union.

The stress test, conducted at consolidated level, involved a total
of 91 banking groups in 20 member states, of which five in Italy:
UniCredit, Intesa Sanpaolo, Monte dei Paschi di Siena, Banco Popolare
and UBI Banca (which account for more than 60 per cent of the total
assets of the Italian banking market). For each of the Italian groups
the Bank of Italy is today publishing the results of the stress test and
some information on their exposures to European general government
sectors. Overall the results confirm Italian banks ability to absorb
the impact of a significant deterioration in todays macroeconomic and
market conditions.

The manner of carrying out the exercise, closely coordinated at
European level, the scenarios adopted, prepared by the ECB and agreed
among the various participating authorities, and the methodologies used,
the same across banks and countries, were rigorous and severe. The
exercise provided for a benchmark scenario and an adverse scenario,
which includes an increase in sovereign risk for the countries of the
European Union. More information on the scenarios and the methodologies
adopted in conducting the stress tests are available on the CEBS
website.

At the end of 2011 the Tier 1 ratio of none of the five groups
would fall below the threshold of 6 per cent, which is two points higher
than the current regulatory minimum. The 6 per cent threshold was set by
the authorities as a benchmark for assessing the possible need for
recapitalization measures. Although the initial capital ratios of the
large Italian banks are well above the regulatory minimums, on average
they are low by comparison with the other European banks. The gap
reflects Italian prudential regulation, which sets more stringent limits
on the inclusion of certain instruments in the capital aggregates that
are the numerator of the ratios, and large-scale public recapitalization
operations that benefited some large European banks. By international
comparison the Italian groups stand out for a low degree of financial
leverage, as a consequence of their business consisting mainly in
traditional intermediation activity.

As part of its prudential supervision, the Bank of Italy will
carefully evaluate the results of the stress test with each of the
groups involved.

[TOPICS: M$$EC$,M$X$$$,M$$CR$,MT$$$$]