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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.

CNBC [1]

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Craig Erlam

Craig Erlam [4]

Senior Currency Analyst at OANDA [5]
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.