Report on the fulfilment of the EBA Recommendation adopted on 15 July 2011

02 May 2012

Following the publication of the 2011 EU-wide stress test results in July 2011, the EBA issued a Recommendation to national supervisory authorities (NSAs) to ensure that appropriate mitigating actions were put in place with respect to (i) banks with a Core Tier 1 capital (CT1) ratio below 5% in the adverse scenario and (ii) to banks with a CT1 ratio close to 5% in the adverse scenario and with sizeable exposures to sovereigns under stress.

Forward looking mitigating measures were identified in the publication templates for relevant banks to address weaknesses. The EBA, as a part of its ongoing monitoring activities, has continued to assess the implementation of these mitigating measures against the requirements of the EBA Recommendation.

NSAs responsible for the supervision of the banks falling under the scope of the EBA Recommendation have provided the details of the mitigating measures taken for the respective banks and of their close monitoring of banks as a part of ongoing supervisory activities.

The EBA is, in general, satisfied with the progress made in the fulfilment of the July 2011 Recommendation and notes that the actions taken  include capital strengthening and adequate recognition of losses. In addition, those banks identified as having weaknesses have subsequently undergone restructuring processes and will no longer exist in the same form as at the moment of the stress test.

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