PARIS (MNI) – France’s four leading banking groups all successfully
passed the EU stress tests, the Bank of France said Friday.
The four groups involved in the exercise — BNP Paribas, Societe
Generale, Groupe Credit Agricole and Groupe BPCE — “compare favorably
to their European counterparts,” the central bank said in a press
release.
“According to the final result, the aggregate core tier 1 capital
ratio of the four banks is 7.5% under the most adverse scenario, i.e.
well above the 5% benchmark threshold set by the tests,” it noted.
That standard is stiffer than the new Basel III guidelines, which
require a core tier one capital level of just 3.5 percent in 2013, 4.0
in 2014 and 4.5 percent from 2015 forward.
The cost of risk for French banking portfolios stands at E50.7
billion in the adverse scenario, cumulated over 2011 and 2012 — a very
sharp rise compared with 2010 (E16.8 billion), according to the Bank of
France release.
This cost would be largely covered by the gross operating income
generated, i.e. E57.3 billion in the stress scenario (an amount that
factors in losses on market activities, which total E12.3 billion,
including E1.5 billion in respect of sovereign risk).
“This figure was calculated under particularly restrictive
conditions that assume no further growth in outstanding loans for two
years and a rise in funding costs,” it noted.
According to Bank of France Governor Christian Noyer, “These good
performances result from sound risk management as well as the French
universal banking model, whose resilience was demonstrated during the
crisis.”
“In particular, the diversification of their activities and funding
sources has shielded French banks from the economic slowdown and more
specific shocks, while continuing to generate regular income,” Noyer
said. “Ultimately, their level of capital is appropriate since it should
enable them to finance the economy even under the most adverse
scenario.”
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