ABN ARMO passes the stress test set by the European Banking Authority (EBA) with flying colours.
Put simply, the stress test looks at how resilient banks are in a hypothetical situation of a deep economic downturn. The EBA stress test assumed a period of two years of economic shrinkage, falling house prices, falling government bond prices, rising unemployment and falling consumer spending.
The consequences of these hypothetical economic conditions were extrapolated for 90 banks in Europe, including ABN AMRO. Core capital is the most important criterion considered in the stress test. How much of this capital would a bank lose in the hypothetical stress scenario?
A bank’s core capital is expressed as a percentage, known as the Core Tier 1 ratio. ABN AMRO’s core capital would reduce in the hypothetical stress scenario from 9.9% to 9.2%. The minimum level set by the EBA is 5%; with 9.2%, ABN AMRO is therefore well above this threshold.
If you would like more information, full details of the outcomes of the stress test for ABN AMRO can be found in the press release of 15 July.