Bank of Valletta passes stress test

Bank of Valletta got a clean bill of health in an EU-wide stress test, according to the Central Bank and the Malta Financial Services Authority.

The results of the stress tests on 91 European banks from all EU member states were released yesterday by the Committee of European Banking Supervisors (Cebs).

Seven banks - five Spanish, one German and one Greek - failed the tests, which assessed the resilience of banks to possible economic shocks and how they would cope with another recession.

"The overall results confirm the resilience of Bank of Valletta plc to the extreme but plausible shocks assumed in this exercise," the Central Bank and the MFSA said in a joint statement.

BOV's capital ratio remained healthy at 9.3 per cent, well above the six per cent threshold set for the exercise. According to the Central Bank, the regulatory minimum is four per cent.

In his first reaction to the results, BOV chairman Roderick Chalmers said the bank enjoyed strong capital buffers that were more than enough to see it through situations of stress. "Capital is the motor which drives the bank's business and the prudent and efficient management of capital is one of our top priorities," he said.

BOV was chosen because it is the largest banking group in Malta.

According to the criteria set by Cebs and the European Central Bank, HSBC Malta plc was included in this exercise as part of HSBC Holding plc and the stress test exercise was conducted by the UK authorities.

HSBC also passed the test with a capital ratio of 10.2 per cent.