EBA欧洲银行-QandARecapitalisationExercise_6页_241kb

EBA Recapitalisation Exercise Summary

Core Content

The European Banking Authority (EBA) initiated a recapitalisation exercise in 2012 with the aim of strengthening the capital positions of EU banks, thereby reinforcing market confidence in the banking sector during a challenging macroeconomic environment and worsening sovereign debt crisis. This exercise was part of a broader set of coordinated policy measures agreed by the European Council in October 2011, which included the need for additional capital to ensure banks could withstand further shocks and protect against residual credit risk.

Main Points

Why the Recapitalisation Exercise?

• The EBA's exercise aimed to improve capital levels, particularly in light of sovereign debt concerns.
• It was designed to ensure that banks’ Core Tier 1 (CT1) capital ratios exceeded the 9% threshold after accounting for a sovereign buffer.
• The exercise was not a stress test, as it did not simulate adverse scenarios or require loss estimates under such conditions.

Comparison with Basel III Monitoring

• The recapitalisation exercise cannot be directly compared with the Basel III monitoring exercise due to:
  • Different sample of banks involved.
  • Different reference dates (December 2011 vs. June 2012).
  • Different capital definitions (Basel III vs. CRD IV).
  • Different objectives (one-off capital strengthening vs. regular monitoring).

Impact on Lending

• The EBA Recommendation did not lead to a negative impact on lending to the real economy.
• Banks with strong capital positions were less affected by the exercise and continued to pursue lending growth.
• Deleveraging measures resulted in a relatively small reduction in RWAs (0.87% of September 2011 levels), mainly in a few banks.

Role of EBA and National Authorities

• The EBA coordinated the exercise and issued a Recommendation to national authorities.
• National competent authorities (NCAs) were responsible for reviewing and approving capital plans, ensuring compliance with the EBA’s requirements.
• They also monitored banks’ capital plans to ensure they aligned with the goals of the exercise and did not negatively affect lending.

Breakdown of Capital Strengthening

• The EBA exercise led to a total capital strengthening of over €200 billion.
• €115.7 billion was injected into 27 banks that had initial capital shortfalls.
• €47 billion was added to the capital of 34 banks without initial shortfalls.
• €24 billion was provided to Bankia (a Spanish bank) through the EFSF financial assistance programme.
• €18 billion was injected into Greek banks under the EU/IMF financial assistance programme.

Asset Sales and Fire Sales

• Asset sales were used to reduce RWAs, but these were limited to non-core assets.
• The EBA explicitly discouraged using capital constraints as a reason for fire sales.
• The reduction in RWAs due to asset sales was only €77 billion, representing 1.6% of the September 2011 RWAs.

Transition to CRDIV/CRR

• The new EBA Recommendation on capital conservation was introduced to prepare banks for the implementation of CRDIV/CRR in 2013.
• Under the new framework, banks will be required to maintain a nominal CT1 capital amount equivalent to the 9% level as of June 2012.
• The sovereign buffer will remain in place until it is withdrawn, and will be considered separately based on market conditions.

Key Information

• CT1 Ratio: The average CT1 ratio for the 61 disclosed banks reached 10.7% in June 2012.
• Sovereign Buffer: This buffer was established to address sovereign debt risks and is separate from the capital requirements.
• Monitoring Mechanism: The EBA and NCAs will monitor capital plans both in normal and stressed conditions.
• Transparency: The EBA disclosed detailed individual data for 61 banks, including capital composition, RWAs, and sovereign exposures, as of December 2011 and June 2012.
• Special Cases: 6 Greek banks and 4 restructured banks (Bankia, WestLB, Dexia, Österreichische Volksbank AG) were excluded from the main disclosure due to their specific circumstances.

Outcome and Next Steps

• The recapitalisation exercise was successful in significantly improving capital positions, but it is not the final step in repairing EU banks' balance sheets.
• The EBA is working on a new Recommendation to ensure ongoing capital conservation and compliance with CRDIV/CRR.
• The EBA will continue to monitor banks' capital plans, especially for those receiving public backstop support.
• The EBA will also be involved in the assessment of Cypriot banks' capital needs, including an asset quality review and stress test.