EBA Stress test and AQR of ECB (October 2014)

26 October 2014

  • BayernLB does well with good results in both the Asset Quality Review (AQR) and the stress test
  • Very good core capital ratio (CET 1) of 12.4 percent in the baseline scenario and 9.4 percent in the adverse scenario
  • Both figures well above the minimum requirement of 8 and 5.5 percent respectively

Munich – BayernLB has passed the European Central Bank's (ECB) Comprehensive Assessment (CA) with a good score, more than fulfilling all minimum capital requirements in the process. The European-wide bank examination consisted of the European Central Bank's Asset Quality Review (AQR) and the stress test conducted by the European Banking Authority (EBA). The Asset Quality Review, which reviewed the quality and long-term value of risk assets on bank balance sheets, was conducted first by the ECB and national banking supervisory authorities working together.

Johannes-Jörg Riegler, CEO of BayernLB, commented, "We were pleased to hear that we had passed the stress test without any problems, as expected. The outcome reflects our good risk structure and solid capital base. Over the next few years we will turn BayernLB into a profitable, high-growth bank for our customers in Bavaria and Germany – while maintaining strict risk discipline at all times."

The main results from BayernLB's Comprehensive Assessment: In the AQR, which examined selected portfolios of risk-bearing assets, BayernLB scored very well. Asset writedowns due to the quality and long-term value of risk assets were charged mainly against Hungarian subsidiary MKB, which was still carried on the Group's balance sheet as at 31 December 2013 but has since been sold off. Despite the capital charges from the Asset Quality Review as a result of MKB's troubles, BayernLB achieved a comfortable core capital ratio (CET1) of 13.2 percent (minimum ratio 8 percent) which formed the starting point for the stress test.

In the stress test, BayernLB's core capital ratio (CET1) in the baseline scenario was 12.4 percent (minimum ratio: 8 percent). The adverse scenario simulated the impact on the Bank of an economic and asset price shock. Under this stress scenario, BayernLB's CET 1 ratio was 9.4 percent, well above the minimum requirement of 5.5 percent.