THE LATEST banking stress tests have not thrown up any fresh capital requirements for Anglo Irish Bank and Irish Nationwide Building Society (INBS) beyond the €34.7 billion already injected into these institutions.
The two banks were exempted from the previous stress-testing round in March, which revealed that a further €24 billion was required to recapitalise the four main banks, bringing the total bill to €70 billion.
In its latest review, Blackrock Solutions, the US financial consultants employed by the Central Bank to conduct the stress tests, has found that previous loan loss forecasts for INBS remain “robust”, while those for Anglo are still “reasonable”.
Last September the Government pumped additional capital of €6.4 billion into Anglo, and €2.7 billion into INBS, bringing the total amount the two banks have received from the State since 2009 to €29.3 billion and €5.4 billion respectively.
“Since these capital injections were made on the basis of loss estimates that have been found to be reasonable by Blackrock this analysis does not indicate that an additional capital requirement is required,” the Central Bank said yesterday.
Anglo and Irish Nationwide were not included in the March stress tests as they are no longer taking deposits or conducting new lending. The Central Bank agreed with the EU, the ECB and the IMF that these institutions would undergo a separate review on a different timeline. However, the approach taken by Blackrock when reviewing INBS was similar to the process used for the four main banks – AIB, Bank of Ireland, EBS and Irish Life and Permanent – in March.
Blackrock applied a loan loss forecasting model to INBS’s portfolio of residential mortgages, commercial real estate lending and non-mortgage consumer and other lending as at December 31st, 2010. It found the loan loss estimates used to calculate the lender’s capital requirements last September remained robust.
In relation to Anglo, the Central Bank decided a full-scale review of this kind would be unnecessary, because a recent set of reviews was considered “current” enough. The two institutions are due to merge into a single State-owned banking group this summer, and will be wound down.
