Business World

Monday 23 April 2018

EU to disclose results of stress tests next month

Irish banks may be forced to publish sensitive financial status reports

Taoiseach Brian Cowen addresses a news conference after a European Union heads of state summit in Brussels yesterday
Taoiseach Brian Cowen addresses a news conference after a European Union heads of state summit in Brussels yesterday

Joe Brennan and Sarah Collins

EUROPEAN Union leaders agreed yesterday to reveal the results of stress tests on the bloc's banks by the end of July in order to calm jittery international markets, spooked since Greece required a bailout last month.

But despite market fears that Spain may be the next country to need a rescue plan, EU leaders, meeting at a summit of the 27-nation bloc in Brussels, insisted they are not worried.

Ireland's Central Bank, headed by Patrick Honohan, believes it is ahead of the game, having drilled into the loan books of the state-guaranteed banks in March.

However, the bank, which is understood to be involved in high-level EU talks on the issue, may be required to provide more disclosure.


It said yesterday it has "nothing further to add following the publication of the recent stress-testing exercise, the Prudential Capital Assessment Review (PCAR), undertaken as part of the plan to determine the capital requirements of the banks."

The domestic institutions were tested against 5pc mortgage book losses -- more than double what analysts estimate -- and 60pc losses on non-NAMA property loans in Ireland as part of its review of the sector in March.

The regulator also applied discounts on banks' initial NAMA loans across the rest of their NAMA-bound portfolios as part of its assessment. As a result, it demanded that Allied Irish Banks raise €7.4bn, Bank of Ireland, €2.7bn, and EBS, €875m, to hit new regulatory capital levels.

It has yet to complete PCARs on Irish Life & Permanent, which believes it will need to raise up to €900m, Anglo Irish Bank and Irish Nationwide.

But it is estimated Anglo will need a total of €22bn, including €14.3bn already pumped into the nationalised lender, and Irish Nationwide, at least €2.6bn.

The Central Bank reiterated a statement by head of regulation Matthew Elderfield, which said it had "applied a robust, realistic and prudent capital standard informed by our own detailed analysis and by emerging best practice internationally".

EU leaders also vowed yesterday to push for global taxes on banks and financial transactions, setting the stage for a conflict over worldwide regulation at next week's Group of 20 meeting.

Proposals for taxes on securities transactions weren't spelled out in detail, with a summit statement saying only that they should be "explored and developed" in concert with the world's leading economies.

Meanwhile, Taoiseach Brian Cowen said on the fringes of the summit that he will be pressing ahead with the programme of Budget cuts agreed for next year.

EU' officials this week backed the Government's plans to shave €3bn off the budget deficit next year, but said they wanted more detail on the cuts. Ireland will be forced to send revenue and expenditure forecasts to Brussels much earlier in the year under new rules.

Irish Independent

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