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Banks (Finance)

Deutsche Bank Passes EU-Wide Stress Test

Strategic Insights

— 1 min read

Deutsche Bank has successfully passed the 2011 EU-wide stress test conducted by the European Banking Authority (EBA), among other regulatory bodies. The test aimed to assess the resilience of European banks to severe shocks and hypothetical stress events. Out of 91 banks, covering over 65% of the EU banking system's total assets, Deutsche Bank demonstrated its ability to maintain a solid capital position. The bank's estimated consolidated Core Tier 1 capital ratio would change to 6.5% under the adverse scenario in 2012, compared to 8.8% as of end of 2010. Despite this, Deutsche Bank feels well-prepared to reach its target of a Core Tier 1 ratio in excess of 8% at the beginning of 2013 under the stricter Basel 3 rules.

Key Takeaways:

  • Deutsche Bank passed the 2011 EU-wide stress test, which assessed banks' resilience to severe shocks and hypothetical stress events.
  • The test covered 91 banks, representing over 65% of the EU banking system's total assets.
  • Deutsche Bank's estimated consolidated Core Tier 1 capital ratio would change to 6.5% under the adverse scenario in 2012, compared to 8.8% as of end of 2010.
  • Despite the lower ratio, the bank feels well-prepared to reach its target of a Core Tier 1 ratio in excess of 8% at the beginning of 2013 under the stricter Basel 3 rules.
  • Deutsche Bank plans to continue maintaining appropriate capital levels, as specified by the capital benchmark set out for the purpose of the stress test.

Statistics:

  • 91 banks were involved in the EU-wide stress test, covering over 65% of the EU banking system's total assets.
  • Deutsche Bank's estimated consolidated Core Tier 1 capital ratio would change to 6.5% under the adverse scenario in 2012.
  • This ratio is compared to 8.8% as of end of 2010.
  • Deutsche Bank aims to reach a Core Tier 1 ratio in excess of 8% at the beginning of 2013 under the stricter Basel 3 rules.
  • The stress test covered a two-year time horizon (2011-2012) with a static balance sheet assumption as at December 2010.

Sources:

  • European Banking Authority (EBA)
  • German Federal Financial Supervisory Authority (BaFin)
  • Deutsche Bundesbank
  • European Central Bank (ECB)
  • European Commission (EC)
  • European Systemic Risk Board (ESRB)
  • Euclid Infotech Pvt. Ltd. (2011) distributed by Contify.com

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