The guiding principle was the requirement that banks' capital buffers had to be large enough to reach a core Tier 1 ratio of 9% as of end-June 2012, following a prudent valuation of exposures to sovereigns. The four participating Dutch banks meet this requirement. Dutch banks’ exposures to high-risk European sovereigns are relatively contained.
The purpose of the recapitalisation exercise coordinated by the EBA was to restore banks' financial resilience, as well as to contribute to the break-up of the direct relation between banks and governments, as part of a broader package of measures to solve the European sovereign debt crisis. A total of 71 European banks took part in the recapitalisation exercise.
In the exercise, banks have to reach a core Tier 1 ratio of 9% as of end-June 2012. For the core Tier 1 solvency ratio, only capital of the highest quality is included. In addition, in calculating the available capital banks had to deduct any unrealised losses for exposures to European sovereigns. These unrealised losses have been calculated on the basis of the rates applying at end-September 2011.
The EBA recommendation that banks must have a core Tier 1 ratio of 9% will remain in force until the implementation of the new European capital requirements (CRR/CRD IV) (noot 1). From then onwards, a new EBA recommendation will enter into force, requiring banks as of that date to hold a minimum nominal capital amount equal to the 9% core Tier 1 requirement as published at end-June 2012. In specific exceptional cases, for instance in the case of restructuring or risk reduction on the balance sheet, a bank's capital level is allowed to be below this point.
The methodology used in this exercise and an overview of the results per bank are public and can be found on the EBA website. Banks will provide an explanation to their individual results in their own publications.
Noot 1: CRR: Capital Requirements Regulation / CRD: Capital Requirements Directive.
If you need further information, please contact:
Tobias Oudejans: tel. nrs. +3120-524 3100 or +316-524 96961
Remko Vellenga: tel. nrs. +3120–524 2712 or +316–524 96574
Flore Kraaijeveld: tel. nrs. +3120-524 3091 or +316-3102 8660