No stress for Polish banks?

Eight banks in the EU failed the stress tests, comprising five banks from Spain, two from Greece and one from Austria. Analysis on the banks revealed that if a 0.5 percent drop in GDP were to occur, the ensuing recession would mean that lenders would not have a core tier 1 capital ratio of 5 percent or more.

The stress tests have not proven to calm market fears throughout the eurozone, however, as the European Banking Authority (EBA) did not include the possibility of a default on Greek sovereign debt.

As a result, the euro currency slumped on global markets, Monday, reaching an all-time low against the Swiss franc.

Meanwhile, the only Polish bank taken into account in the EBA tests, PKO Bank Polski came out unscathed in the financial analysis [results here - PDF], maintaining asset values of 12.1 percent at the end of this year, or 12.2 percent at the end of 2012.

The Polish Financial Supervision Authority also ran similar tests on sixteen banks present in Poland, which constitute part of larger groups of banks that were part of the EBA’s stress tests. All of them passed the Polish-led analyses.

Deutsche Bank Polska (not to be confused with Deutsche Bank PBC) came out top in the domestic tests, keeping as much as 25 percent of its tier 1 capital ratio.

Pekao SA would maintain around 18 percent, while nine banks would maintain over 10 percent of tier 1 capital ratio.

At the end of May, banks’ average solvency rate in Poland amounted to 13.8 percent, with net profits in the banking sector in Poland reaching 6.2 billion zloty (1.53 billion euro) between January and the end of May this year, a rise of 39 percent on the same period last year. (jb)

Source: Rzeczpospolita/Wall Street Journal/MarketWatch