KBC Bank was subject to the 2011 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with the National Bank of Belgium, the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB).
KBC Bank notes the announcements made today by the EBA and the National Bank of Belgium on the EU-wide stress test and fully acknowledges the outcomes of this exercise.
The EU-wide stress test, carried out across 91 banks covering over 65% of the EU banking system total assets, seeks to assess the resilience of European banks to severe shocks and their specific solvency to hypothetical stress events under certain restrictive conditions.
The assumptions and methodology were established to assess banks' capital adequacy against a 5% Core Tier 1 capital benchmark and are intended to restore confidence in the resilience of the banks tested. The adverse stress test scenario was set by the ECB and covers a two-year time horizon (2011-2012). The stress test has been carried out using a static balance sheet assumption as at December 2010. The stress test does not take into account future business strategies and management actions and is not a forecast of KBC Bank's profits.
As a result of the assumed shock, the estimated consolidated Core Tier 1 capital ratio of KBC Bank would change to 10,0% under the adverse scenario in 2012 compared to 10,5% as of end of 2010. This result incorporates the effects of the mandatory restructuring plans agreed with the EU Commission before 31 December 2010.
Details on the results observed for KBC Bank:
The EU-wide stress test requires that the results and weaknesses identified, which will be disclosed to the market, are acted on to improve the resilience of the financial system. Following completion of the EU-wide stress test, the results determine that KBC Bank meets the capital benchmark set out for the purpose of the stress test. The bank will continue to ensure that appropriate capital levels are maintained.
Jan Vanhevel, KBC Group CEO: 'KBC is satisfied that the outcome of the stress tests proves, once again, that under these stress scenarios, the bank adequately meets the solvency requirements. The fact that the EBA baseline and adverse scenarios are challenging ones - even more challenging than last year -makes KBC's result even more satisfying. This should also offer comfort to all stakeholders placing their trust in our institution.'