PKO BP, Pekao in top three most resilient European banks

The results of an EU-wide stress test of 48 banks shows that Polish bank PKO BP is the most resilient to a common set of adverse economic developments. Bank Pekao also came in the top three of the tests conducted by the European Banking Authority (EBA).

Stress tests are conducted "to assess the resilience of EU banks to a common set of adverse economic developments in order to identify potential risks, inform supervisory decisions and increase market discipline," the EBA website states.

The tests were conducted on 48 banks from the EU and Norway, together accounting for about 70 percent of European banking sector assets. Two Polish banks were subjected to the tests - PKO BP and Pekao.

"The bank's strong capital base means that even in extremely unfavourable conditions, the forecast levels of the CET 1 coefficient fulfill supervisory norms," PKO BP wrote in a Saturday press release. "The bank's business model, which is based on traditional financial instruments such as credit and deposits, and which are supported by a developed risk management system, had a positive influence on achieving the results."

Bank Pekao announced in a communique that in line with this year's stress test results, the banks consolidated coefficient of Tier 1 common equity (CET 1) would be at the level of 16.5 percent in 2020 in the base scenario and 15.47 in the extreme scenario.

"This year's tests put Bank Pekao among the three most resilient European banks (among the 48 included in the sample), with the sensitivity of capital indicators in stress conditions several time below the average of European banks," Pekao wrote.