Both Hungarian banks involved in the European bank stress test, OTP Bank and FHB, passed the test with good marks.
OTP Bank on Friday said its results were “sound and well above the threshold expected”.
Under the most adverse scenario – which adds sovereign shock to the adverse scenario – OTP Bank's consolidated Tier 1 ratio would stand at 16.2% by the end of 2011, more than four times the mandatory minimum level of 4%, OTP Bank said.
Under the simple adverse scenario, the bank's Tier 1 capital ratio would reach 16.8%, the test showed. The bank's two-year loss rate on corporate exposure would be 9.71% and its two-year loss rate on retail exposure would be 6.51%.
Considering the effect of sovereign shock on the adverse scenario, OTP Bank's two-year loss rate would be 10.35% for corporate exposure and 6.95% for retail exposure.
The results of the stress test suggest a buffer of €2.7 billion of Tier 1 capital against the 6% threshold agreed on for the purposes of the exercise.
The other bank was FHB, where as the result of the assumed shock under the adverse scenario, the estimated consolidated Tier 1 capital ratio would change to 10.8% in 2011, compared to 8.6% as of end of 2009.
An additional sovereign risk scenario would have a further impact of 0.2 percentage point on the estimated Tier 1 capital ratio, bringing it to 10.6% at the end of 2011, compared with the regulatory minimum of 4%, the bank said on Friday.
The results of the stress suggest a buffer of €73.6m of the Tier 1 capital against the threshold of 6% of Tier 1 capital adequacy ratio for FHB Mortgage Bank agreed exclusively for the purposes of this exercise.
Tier 1 ratio after the benchmark scenario was estimated to be 14.1% in 2011.
Gross and net exposure of FHB Mortgage Bank to central and local governments is €340m in Hungary and €100,000 in Germany, the bank said. (MTI-Econews)