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Regulation – Many German banks fail at Stresestest News

Sunday, September 3rd, 2017 | Economy

The impact of the simulation by the Bundesbank and BaFin would be even higher if the Stresestest had taken into account contagion effects, said Bundesbank board member Andreas Dombret at a press conference in Frankfurt. He presented the results of the survey of some 1,500 banks together with Raimund Röseler, Executive Director of the Banking Supervisory Authority at BaFin.
The Stresest test shows that the banks should be very careful about how well they can deal with the risks identified in the survey, Dombret said, adding that the message of the survey and the stress test at banks and savings banks is: who is health of their own home in the long run, should make preparations.
German banks have long suffered from a relatively low level of profitability in a fragmented market, which has been exacerbated by low and temporarily negative interest rates. The banks said in the survey that they expect their pre-tax profit to fall by 9 percent over the next five years.
The stress test used by the financial supervisors simulated different scenarios, including the impact it would have on the balance sheet if the ECB raised the benchmark interest rate by 200 basis points. In this scenario, which Röseler regards as very unlikely, 68 of the banks surveyed would fall short of the capital requirements of regulatory authorities.
"We know which banks are concerned and are quite relaxed," said Röseler.
(Bloomberg)

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