Regulated information* - 23 July 2010 (06.00 p.m. CEST)
KBC Bank NV welcomes today's publication of the results of the 2010 EU-wide
stress testing exercise coordinated by the Committee of European Banking
Supervisors (CEBS), in cooperation with the European Central Bank, the CBFA
(Belgian supervisory authority) and the National Bank of Belgium.
The stress test focused on KBC Bank NV.
KBC is satisfied that the outcome of the stress test proves that, even under
these stress scenarios the bank adequately meets the legal and market
requirements in terms of solvency. The fact that the CEBS benchmark and
adverse scenarios are challenging ones, adds comfort to the result for KBC.
This stress test complements the risk management procedures and regular stress
testing programmes set up in KBC Bank under the Pillar 2 framework of the Basel
II and CRD[1] requirements.
The exercise was conducted using the scenarios, methodology and key assumptions
provided by CEBS (see the aggregate report published on the CEBS website[2]). As
a result of the assumed shock under the adverse scenario, the estimated
consolidated tier-1 capital ratio would change to 9.8% in 2011 compared with
10.9% at the end of 2009. An additional sovereign risk scenario would have a
further impact of 0.4 percentage points on the estimated tier-1 capital ratio,
bringing it to 9.4% at the end of 2011, compared with the regulatory minimum of
4%.
This last result suggests a buffer of 4.6 billion EUR of the tier-1 capital
against the threshold of 6% of tier-1 capital adequacy ratio as agreed
exclusively for the purposes of this exercise. This threshold should by no means
be interpreted as a regulatory minimum (the regulatory minimum for the tier-1
capital ratio is set at 4%), nor as a capital target reflecting the risk profile
of the institution determined as a result of the supervisory review process in
Pillar 2 of the CRD.
KBC Bank has held rigorous discussions of the results of the stress test with
the CBFA and the National Bank of Belgium.
Given that the stress test was carried out under a number of key common
simplifying assumptions (e.g. constant balance sheet) the information on
benchmark scenarios is provided only for comparison purposes and should in no
way be construed as a forecast.
The objective of the extended stress testing exercise is to assess the overall
resilience of the EU banking sector and KBC Bank's ability to absorb further
possible shocks on credit and market risks, including sovereign risks.
In the interpretation of the outcome of the exercise, it is imperative to
differentiate between the results obtained under the different scenarios
developed for the purposes of the EU-wide exercise. The results of both the
benchmark and adverse scenarios should not be considered as representative of
the current situation or possible present capital needs.
A stress testing exercise does not provide forecasts of expected outcomes, nor
does it reflect in any way KBC's own budgets and forecasts. It is rather a
"what-if " analysis, based on a number of plausible but extreme assumptions
which are therefore not very likely to materialise, selected by CEBS, aimed at
supporting the supervisory assessment of the adequacy of the bank's capital.
Different stresses may produce different outcomes depending on the circumstances
of each institution.
More information on the scenarios, methodology, aggregate and detailed
individual results is available from CEBS[3]. Information can also be obtained
from the website of the CBFA.
--------------------------------------------------------------------------------
[1] Directive EC/2006/48 - Capital Requirements Directive (CRD)
[2] See:
http://www.c-ebs.org/EU-wide-stress-testing.aspx
[3] See:
http://www.c-ebs.org/EU-wide-stress-testing.aspx
* This news item contains information that is subject to the transparency
regulations for listed companies.
[HUG#1433718]
KBCstresstest2010ENG:
http://hugin.info/133947/R/1433718/379618.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: KBC Groep via Thomson Reuters ONE