Moody's: EU Banks broadly resilient to EBA's severe scenario in 2016 stress tests

More from Moody's

• The European Banking Authority's (EBA) 29 July stress test results show that most European Union (EU) banks prove to be resilient under adverse conditions
• Marking a significant improvement upon the results of the EBA's similar test in 2014
  The EBA's 2016 EU-wide stress test exercise covered 51 European banks and highlights potential capital pressures under both mild and severely stressed economic conditions
• The results will inform the Supervisory Review and Evaluation Process (SREP), the European regulators' annual in-depth evaluation of each bank's risk exposure. This, in turn forms the basis of supervisors' decisions on bank-specific minimum capital -- or Pillar 2 -- requirements.

Reading through the report brings this non-surprise:

• Only one bank of the tested sample, though, had a negative CET1 in the adverse scenario -- Italian lender Banca Monte dei Paschi di Siena S.p.A (MPS)

But:

• Moody's notes, however, that Italian banks had very different outcomes in the test. The Italian banks' stressed CET1 ratios in the adverse scenario range from -2.2% for MPS, to 10.2% for Intesa Sanpaolo SpA. Four of the five participating banks show results above 7.0% and are within Moody's expectations for this group.