RBS, Lloyds Banking: EBA Stress Test Results Show Improvement In CET1 Ratio

(RTTNews) - Royal Bank of Scotland Group plc (RBS, RBS.L) said it has noted the announcement made today by the European Banking Authority or EBA and the Prudential Regulation Authority regarding the results of the 2016 EBA EU-wide stress test. The bank noted that the 2016 EBA EU-wide stress test does not contain a pass/fail threshold.

On a fully loaded Basel 3 basis, RBS's modelled Common Equity Tier 1 or "CET1 ratio under the adverse scenario was 8.1 percent as at 31 December 2018. The low point CET1 ratio under this scenario was 7.8 percent as at 31 December 2017.

Further, RBS said its modelled leverage ratio under the adverse scenario was 3.6 percent on a fully loaded Basel 3 basis, and 4.2 percent under the PRA transitional definition for leverage ratio as at 31 December 2018.

The low point leverage ratio under this scenario was 3.5 percent on a fully loaded Basel 3 basis as at 31 December 2016 and 4.2 percent under the PRA transitional definition as at 31 December 2017.

RBS noted that the EBA stress test results cannot be used to infer outcomes of the 2016 Bank of England or BoE stress tests for UK banks.

Ewen Stevenson, Chief Financial Officer of RBS, said, "The EBA stress test results demonstrate our continued progress towards transforming the balance sheet to being safe and sustainable. Over recent years we have materially strengthened our CET1 ratio, substantially reduced our balance sheet and leverage, and continued to de-risk our asset exposures."

In a separate statement, Lloyds Banking Group plc (LLOY.L. LYG) said that the EBA stress-test results are significantly above the Group's minimum capital requirements. This outcome reflects the de-risking undertaken and re-affirms the strong capital and balance sheet position of the Group.

The bank said its estimated CET1 ratio, using the CRDIV transitional rules as implemented in the UK by the PRA, started at a pro-forma CET1 ratio of 13.0 per cent as at December 2015, and in the EBA Adverse scenario the forecast ratio is 10.1 per cent as at December 2018.

The Group's result on a fully loaded basis remained a CET1 ratio of 10.1 per cent in 2018. At the same time, the Group's fully loaded leverage ratio moved from 5.2 per cent to 4.6 per cent.