World’s Oldest Bank Fares Worst in EU Stress Test

Stricken Italian lender Banca Monte dei Paschi di Siena looked set to win an 11th hour reprieve Friday night when it announced it had secured underwriters to back a turnaround – just at the point when Europe’s banking authority placed it on the danger list of the region’s financial industry.

Stress tests by the European Banking Authority found that BMPS, the world’s oldest bank, would have the greatest difficulty out of 51 of Europe’s top banks covering its toxic loans between now and 2018 in adverse economic conditions.

The EBA unveiled that the Italian lender’s fully-loaded common equity tier 1 capital (CET1) ratio – a key measure of a bank’s ability to withstand shocks – would fall into negative territory, -2.23 percent, if faced with an adverse economic scenario in 2018; a swing of 14.23 percent from what is expected to be the baseline scenario.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam