Spring 2020 EU-wide transparency exercise (EBA)

European Banking Authority (EBA)

Since 2011, the EBA has been conducting transparency exercises at the EU-wide level on an annual basis. These exercises are part of the EBA's ongoing efforts to foster transparency and market discipline in the EU financial market, and complements banks' own Pillar 3 disclosures, as laid down in the CRD IV.

In 2020, following the postponement of the EU-wide stress test exercise, the EBA decided exceptionally to release two Transparency exercises, one in late Spring and one in late Autumn, with the aim to inform the public on the conditions of the EU banking sector at the start of the COVID-19 crisis and the impact of the crisis in the first half of 2020.

 


Spring 2020 EU-wide transparency exercise (EBA)

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In this regards, in June 2020, the EBA published the results of the spring 2020 EU-wide transparency exercise, which will facilitate the consistent comparison and assessment of the different banks over a period of time and by country before the start of the COVID-19 crisis. In particular, this document assesses the results relative to the potential impact on, among others, capital, leverage, risk weighted assets (RWAs), P&L, credit risk, market risk, or asset quality, which will serve as a starting point for the analysis of the banking situation prior to the COVID-19 crisis.

According to the results of this exercise completed on December 31st 2019, the EU banking sector has shown itself to be in a strong capital position and to have improved the quality of its assets. However, it has also shown a significant disparity among some of the European Union's banks.

This Technical Note analyses the main spring 2020 EU-wide transparency exercise results focusing on the aggregated results across the EU, as well as on the results of the countries with the highest volume of assets within the banking system.

Executive summary

The EBA published in June 2020 the result of the spring 2020 EU-wide transparency exercise, which provide detailed information on, among others, capital, leverage, risk weighted assets  (RWA), P&L, credit risk, market risk, or asset quality.

Area of application

The spring 2020 EU-wide transparency exercise is applicable to 127 banks from 27 EEA countries at the highest EU level of consolidation.

Main content

This Technical Note analyses the aggregate results of the spring 2020 EU-wide transparency exercise relative to the potential impact on the following aspects:

  • Capital: The CET 1 ratio moves from 14,4% fully loaded in September 2019 to 14,8% in December  2019.
  • Leverage ratio (LR): The LR increases from 5.2% fully loaded in September 2019 to 5.5% in December 2019.
  • RWAs: The total RWAs decreases a 1.78% in December 2019, compared to September 2019. Credit, market and operational risks were the main drivers of the RWA decrease in 2019.
  • Non-performing Loans (NPLs) and Forborne Loans (FBLs): The NPL ratio decreases from 2.9% in September 2019 to 2,7% in December 2019. The FBLs ratio also decreases from 1.83% in September 2019 to 1.75% in December 2019.
  • P&L: Net interest income (NII), net fee and commission income, and the net P&L have increased by 28.0%, 32.5% and 11.3% respectively from September 2019 to December 2019.

In addition, this Technical Note includes the individual results for each of the major geographies, i.e. Germany, Spain, France, Italy, and UK.

Access the full document in English.