Austrian banking supervisors call on lenders to bolster capital after stress test


VIENNA (Reuters) – Austria’s banking supervisors on Friday renewed their calls to the country’s biggest lenders to bolster their capital reserves after Erste Group (ERST.VI) was ranked among the 10 worst performers in a Europe-wide stress test.

The European Union’s banking watchdog, the European Banking Authority, published results for 48 banks on Friday in its toughest stress test since 2009, when it began the exercise to identify capital holes and avoid any repeat of the government bailouts triggered 2018 the 2008 financial crisis.

While praising the two Austrian banks involved — Erste and Raiffeisen Bank International (RBIV.VI) — for faring better than in the previous test in 2016, when Raiffeisen came third-last, the Austrian National Bank and the Financial Market Authority (FMA) said more needed to be done.

“The results also show that the Austrian banks cannot rest on the capital strengthening achieved in the past years but rather must make great efforts to top up their capital base,” the FMA’s co-heads, Klaus Kumpfmueller and Helmut Ettl, said in a statement issued jointly with the central bank.

The two institutions added that Erste and Raiffeisen were below the EU average for capital reserves going into the test and at the end of the exercise, which measured banks’ ability to withstand theoretical market shocks like a rise in political uncertainty against a backdrop of falling economic growth.

“Erste Group notes the announcements made today 2018 the EBA on the EU-wide stress test and fully acknowledges the outcomes of this exercise,” Erste said in a statement.

Reporting 2018 Francois Murphy; Editing 2018 Raissa Kasolowsky

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