Spanish banks have begun to communicate the results of the ECB examinations for 2023, in which the tests are tightened due to the increase in risks and the turbulence expected for next year. All banks except Bankinter are required to do more and, of those that have reported their grades, which are also BBVA, CaixaBank, Sabadell and Unicaja, all pass the tests.
Technically, what banks have reported today is the result of the ECB's Supervisory Review and Evaluation Process (SREP), which includes the minimum prudential capital requirements for 2023. The key term is CET 1, which is which measures the strength of the banks, and from Frankfurt a different percentage is required from each entity.
The ECB demands a CET 1 of 8.72% from BBVA, when in its last quarterly results the entity reported a percentage of 12.45%, so it passes the test with flying colors. The ECB percentage is for the group in consolidated terms, while for the individual company it is below, at 7.85%.
CaixaBank must exceed a percentage of 8.44% in 2023, compared to the 8.31% forecast for 2022, but it will do so easily, having a CET 1 of 12.38%.
Sabadell must maintain a minimum CET 1 ratio of 8.65% next year, which includes a countercyclical buffer for exposure to the United Kingdom, where it operates through the subsidiary TSB. The bank's quality capital was 12.65% as of September of this year, so it also meets the requirements.
Bankinter's requirements have not been raised because "the risk profile remains unchanged compared to previous years", which places it among "the Spanish and European entities with the lowest capital requirement". The ECB asks for a CET 1 of 7.72% and the bank has it at 11.9%.
Unicaja, the result of the merger with Liberbank, is asked for a higher percentage, 8.27%, compared to the 13% registered by the entity. The bank stresses that the ECB's requirement will not affect the distribution of dividends.
The CET 1 is the result of dividing the basic capital of the bank, where shares and reserves enter mainly, by the APR (risk-weighted assets). Banking sources indicate that Spanish banks generally fare worse in this photo because the Bank of Spain is more demanding than other European supervisors when calculating APRs. For this reason, they ask for harmonization.
The ECB has just completely reformulated its banking supervision priorities to avoid the risks associated with "disruptions" and "inflationary pressures" on the economy. The central bank will carry out on-site inspections of entities to verify their exposure to real estate and aspects such as energy.
According to him, "extreme prudence is necessary on the part of credit institutions", which must "strengthen their capacity to resist immediate macro-financial and geopolitical disturbances". "Elevated uncertainty and downside risks associated with the current macrofinancial and geopolitical environment are significantly affecting the outlook for the European banking sector," he says.
