BERLIN (MNI) – The German Finance Ministry on Friday said the bank
stress test results did not take into account the restructuring already
under way for Germany’s state-owned lender Hypo Real Estate (HRE), the
only German bank which failed the test.
The restructuring measures for the HRE foresee “in the second half
of 2010 a shift of assets to a clearing institute and a further
strengthening of capital,” the Ministry said.
Moreover, the government’s Financial Market Stabilization Fund
(Soffin) is ready to recapitalize any banks if need be, the Ministry
reaffirmed.
Finance Minister Wolfgang Schaeuble called the outcome of the
stress tests in Germany “a positive signal.” Yet, he added that
regardless of the “pleasing” results, “there remains a need to achieve
further consolidation in the Landesbank sector.”
Under the criteria applied by the Committee of European Banking
Supervisors (CEBS), a bank is deemed to have passed the stress test if
its tier 1 capital ratio does not drop below 6% in any scenario.
Even under the most extreme of the applied scenarios, 13 of the 14
German banks showed a tier 1 capital ratio of more than 6%; nine of the
participating banks posted a tier 1 capital ratio of more than 8% in
this particularly severe stress scenario, which is more than twice the
regulatory minimum.
Only HRE failed the test. While the state-owned lender posted a
tier 1 capital ratio of 7.8% in 2011 under the benchmark scenario, the
ratio fell to 5.3% under the stress scenario and to 4.7% under the
worst-case scenario.
–Berlin bureau: +49-30-22620580; email: twidder@marketnews.com
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