Thursday 25 May 2017

Bank of Ireland likely to pass stress test -- Moody’s

Moody's: 'We'd be very surprised' if Bank of Ireland was told to find extra cash. Photo: Bloomberg News
Moody's: 'We'd be very surprised' if Bank of Ireland was told to find extra cash. Photo: Bloomberg News

Bank of Ireland will probably pass European banking stress tests after raising €2.93bn of capital in June, Moody’s Investors Service said.

“We’d be very surprised” if Bank of Ireland was told to find extra cash, London-based Moody’s analyst Ross Abercromby said in a telephone interview.

Bank of Ireland and rival Allied Irish Banks are among 91 European banks undergoing stress tests to show whether they can withstand a shrinking economy and drop in the value of government bonds.

The financial regulator told the two banks to raise a combined €10bn by the end of December, following a stress test of domestic lenders in March.

While AIB may be asked to increase capital levels, that should be covered by the company’s plan to raise €7.4bn by the end of year, Abercromby said.

“We wouldn’t be surprised if AIB was required to raise capital,” he said. “But the difference for AIB, compared to many European peers, is that the bank has already been through the domestic regulator’s stress test and has been told to raise €7.4bn.”

Abercromby said the regulator’s capital test on banks, the so-called Prudential Capital Assessment Review, “looked to be somewhat stronger” than the Committee of European Banking Supervisors’ tests.

Bloomberg

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