Substantial Progress Made in Addressing Bank Capital and Liquidity Requirements, says IBF

July 15, 2011

The Irish Banking Federation (IBF) welcomes the clarity that publication of the latest stress test results by the European Banking Authority (EBA) provide on European banks’ capital requirements.

Irish banks have already made substantial progress in addressing the recapitalisation and liquidity requirements established through the Central Bank of Ireland’s own stress tests in recent months.  The EBA stress test results, which take account of the recapitalisation measures announced following the Prudential Capital Assessment Review (PCAR), show that the Irish banks meet the stress requirements and do not require additional capital beyond the requirement set in the Central Bank’s Financial Measures Programme published in March 2011.

Given the detail, extensiveness and above all the rigour of the Central Bank’s tests – providing as they did for a more severe and prolonged scenario than the EBA – the recapitalisation and liquidity measures arising from the results marked a milestone in addressing the issue of restoring confidence to the country’s domestic banking system.

The capital levels of the domestic banks will be well in excess of the 10.5% (Core Tier 1) that is the internationally-accepted target.  Yesterday’s third quarterly review by the EC, the ECB and the IMF noted that the “restructuring of banks is ahead of schedule” and the “recapitalization of domestically owned banks is expected to be completed by end July, with the fiscal cost reduced by burden-sharing with subordinated debt holders. Deleveraging of banks is making progress, and will deliver a smaller more robust system while avoiding fire sales.”

IBF is intent on working with Government, the regulatory authorities and other key stakeholders to rebuild the domestic banking sector in support of the economy and its people.

Note

The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.