AIB's European Banking Authority Stress Test
8th December 2011
Allied Irish Banks, p.l.c. (?AIB?) has today published the results of the EU-wide stress testing exercise co-ordinated by the European Banking Authority (EBA) under the supervision of the Central Bank of Ireland (CBI).
The published results confirm that AIB does not require any additional capital. AIB has been recapitalised to meet the requirements of the Prudential Capital Assessment Review (PCAR) set by the CBI in March 2011 and is required to maintain a minimum Core Tier 1 ratio of 10.5% on an ongoing basis.
To view the published results including the EBA disclosure templates for AIB please click here here.
For further information, please contact:
Director of Corporate Affairs & Marketing
EBA Communication Elements
Allied Irish Bank p.l.c. notes the announcements made today by the European Banking Authority and competent National Supervisor regarding the capital exercise, which demonstrate the following result for Allied Irish Bank p.l.c..
The capital exercise proposed by the EBA and agreed by the Council on 26 October 2011 requires banks to strengthen their capital positions by building up a temporary capital buffer against sovereign debt exposures to reflect current market prices. In addition, it requires them to establish a buffer such that the Core Tier 1 capital ratio reaches a level of 9% by the end of June 2012. The amount of any final capital shortfall identified is based on September 2011 figures. The amount of the sovereign capital buffer will not be revised.
71 banks across Europe, including Allied Irish Bank p.l.c., were subject to the capital exercise whose objective is to create an exceptional and temporary capital buffer to address current market concerns over sovereign risk and other residual credit risk related to the current difficult market environment.This buffer would explicitly not be designed to cover losses in sovereigns but to provide a reassurance to markets about banks' ability to withstand a range of shocks and still maintain adequate capital.
Following completion of the capital exercise conducted by the European Banking Authority, in close cooperation with the competent national authority, the exercise has determined that:
Allied Irish Bank p.l.c. meets the 9% Core Tier 1 ratio after the removal of the prudential filters on sovereign assets in the Available-for-Sale portfolio and prudent valuation of sovereign debt in the Held-to-Maturity and Loans and receivables portfolios, reflecting current market prices.
The methodology underlying the capital exercise was outlined by the EBA prior to its announcement to ensure consistency across all banks in the EU banking system involved in the exercise.