Stress test of the European banking sector published
In June, the Economic and Financial Affairs Council (Ecofin) mandated the Committee of European Banking Supervisors (CEBS) in collaboration with the European Central Bank, European Commission and national supervisors to conduct a union-wide stress test for the banking sector in the EU. The test covers 91 banks and approximately 65 % of the aggregate balance sheet of the banking sector in the EU. In Finland, the Financial Supervisory Authority (Finanssivalvonta) was responsible to conduct the test concerning domestic banks (OP-Pohjola Group).
FSA has published the stress test of OP-Pohjola Group. Nordea Bank Finland Oyj and Sampo Pankki Oyj were tested within the tests of their parent companies Nordea and Danske Bank. The national supervisors of Sweden and Denmark have published these results accordingly.
The stress tests confirm that the amount of capital for OP-Pohjola, Nordea and Danske bank is adequate to face the adverse consequences of a substantially weaker economic development in 2010 and 2011. The banking sector in Finland has not needed so far state guarantees or capital injections from the state.
Finance Ministers in the EU have emphasized the need for readiness for co-ordinated and swift procedures if individual banks should be endangered in terms of solvency. The European Union has common principlesfor such scenarios. The principles concern, among others, asset swaps, capital injections, state guarantees and restructuring. In Finland, as of now, it is possible to recapitalize the banks if such a need should arise to maintain capital adequacy. The results of the stress tests indicate that such need is not imminent or probable.
Ministry of Finance emphasizes the need to continue the monitoring the stability of the banking system on regular basis by conducting stress tests on a EU-basis.
For details and methodology of the test, please consult FSA-Finland (www.finanssivalvonta.fi)
The executive summary and aggregate results are available at the CEBS website (www.c-ebs.org)
Contact:
Undersecretary of the State, Mr. Martti Hetemäki, tel. 358-9-16033091
Legislative Counsellor, Mr. Erkki Sarsa, tel. 358-40-7346936