WestLB Passes EU-Wide Stress Test
Core Tier 1 capital ratio of 6.1% under adverse scenario
WestLB, as expected, passed the EU-wide stress test coordinated this year by the newly established European Banking Authority (EBA). The stress test was carried out across 90 banks from 21 countries. To pass the test, banks´ consolidated Core Tier 1 capital ratio under the adverse scenario must exceed a 5% benchmark over a two-year time horizon (2011-2012). With a ratio of 6.1% WestLB comfortably meets the capital benchmark.
Under the EBA requirements, the stress test was carried out on the basis of the portfolio of the WestLB Group as of the end of 2010 (i.e. including WestImmo and readybank). The agreement on a binding framework for the restructuring plan of WestLB reached at the end of June 2011 has therefore not yet been taken into account.
The latest stress test was noticeably stricter than in the previous year. Thus, the EBA increased the requirements on the eligible capital components and confined them to Core Tier 1 capital. Compared to the last stress test, the macroeconomic assumptions under the adverse scenario were also stricter. Additionally, sovereign exposure in the banking book was considered.
Thomas Gross, CFO and CRO of WestLB, said: “The results of the stress test confirm that WestLB is solidly capitalised. We laid the foundations for this by reducing our risk profile significantly from 2009 onwards and transferring assets to the EAA. The Bank is therefore well prepared for the upcoming transformation process.”
For further details please refer to the disclosure tables, which can be downloaded at www.westlb.com.