Despite the fact that it is the only Portuguese bank to have failed central bank ‘stress tests’, Millennium BCP has pooh-poohed the censure, guaranteeing that today it is “stronger and more solid than ever”.
As observers might have expected, the bank was quick to allay doubts as to its ability to survive any further crises in the Portuguese economy, pointing out that a major increase in capital undertaken last summer has meant that it is now in very good health.
Millennium BCP’s executive president Nuno Amado told journalists on Sunday that the ECB tests were all run against figures released by Europe’s banks at the end of 2013.
“If the exercise was done today, with the positive development of the bank and the measures already taken, BCP would be in line with the values defined by the ECB,” he guaranteed.
Issuing a communiqué designed to back BCP’s claims, the Bank of Portugal explained that the scenario that saw the bank fail its test was “very unlikely” to occur.
A total of 130 European banks were put through their paces by the ECB and only 25 – mostly Italian – failed.
The paces involved capital asset evaluation and ‘tests’ to see how well the banks would react in normal/adverse scenarios.
BCP only failed the “worst case scenario” test – and that is why essentially no-one appears to be too worried.
But as financial analysts on Bloomberg TV asked: “What Europe seems to be waking up to now is the question – what do you do about all the banks that just barely passed the tests?”
Andreas Dombret of Germany’s Bundesbank maintains there is still “a lot more work to do. Competition is much more international”, he told Bloomberg, “and much more fierce”.
In other words, “none of the banks can afford to relax” and rest on their laurels.
Bloomberg also pointed out that of the 25 ‘failures’, only eight banks are seen as needing to increase their capital “and some of these have already agreed to call it a day and wind up altogether”.
Thus, Millennium BCP, for now, is out of danger.
Other Portuguese banks tested were Caixa Geral dos Depósitos and BPI.
Novo Banco avoided the test due to its current restructuring, but according to financial reports in the media, the ECB will apply stress tests to Novo Banco “at the end of the year”.
