Portuguese banks pass ECB’s solidity test. Novo Banco was not tested

  • ECO News
  • 15 January 2018

CGD, BCP, BPI, Santander Totta and Montepio revealed the results of their solidity test. All of them passed ECB's exam. Novo Banco was left out of the assessment for being a transition bank.

The European Central Bank (ECB) assessed banks from all over Europe. The Portuguese banks — excluding Novo Banco, because it is a transition financial institution — were also evaluated, and they did not fail the test. CGD, BCP, BPI, Santander Totta and, finally, Montepio all showed a higher solidity than the minimum percentage requested, although some performed better than others. And in spite of the fact that they are not forced to disclose the results, banks chose to publicly do so, seeking to conquest investors and savers’ trust.

BPI was the first to reveal the results of the Supervisory Review and Evaluation Process (SREP), in December. Yet, in spite of the fact that it did pass the test, it did not get the best grade — assessing by the differential between the phased Common Equity Tier 1 ratio (CET1) and the minimum amount demanded by the institution headed by Mario Draghi. So who was the top student? BCP. The entity headed by Nuno Amado has a CET1 of 13.2%, in comparison to a minimum of 8.8125%. The same is to say that it fell 4.39% above the minimum requirement.

CGD, on the other hand, surpassed ECB’s demands by a “significant” margin, stated the bank headed by Paulo Macedo when he presented the results of this assessment. And it is confirmed. The financial institution had a 13% ratio, more than four percentage points above what is asked by the regulator.

BPI, the first bank to present SREP, might not have had a differential as high as CGD or BCP, but it has equally comfortable levels. “Considering the ratios seen on September 30, 2017, BPI complies with the minimum ratios requested concerning CET1, Tier 1 and the total ratio”, the entity disclosed, which presents a 12.5% CET1, phased, and a total ratio of 13.9%. The minimum demanded by ECB was 8.75% and 12.25%, respectively.

Santander, who owns Santander Totta, was also able to pass the test, although the differential in comparison to the minimum requested by ECB was smaller than what was presented by Montepio, the last to disclose the results of the test to investors.

While Santander had a CET1 phased ratio of 12.18% and a 3.52 percentage points’ margin in comparison to the 8.655% demanded by Mario Draghi, Montepio, the bank still held by Félix Morgado, assured a 3.6 percentage points’ differential.  The bank, now fully held by Associação Mutualista, had a 13% phased CET1 (only surpassed by BCP), above the minimum limit of 9.4%, the highest of all Portuguese banks that went under exam.

Novo Banco was not tested because the bank headed by António Ramalho was still a transition bank when the exam was taken, so he was dismissed. Even so, ECB demands that the institution has, throughout next year, a CET1 phased ratio of 10.5% and a total ratio of 14%, ECO knows.

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