November 2, 2018 / 10:22 AM / 9 months ago

ECB ranks Italy's Carige as 'fragile' in adversity test - report

MILAN (Reuters) - Italy’s Banca Carige (CRGI.MI) has been categorised as “fragile” in a European Central Bank test of European lenders, with its capital ratio falling below a level set by regulators in an “adverse” scenario, Il Sole 24 Ore reported on Friday.

Carige’s problems are widely known and the ECB has already taken them into account in asking the Genoa-based bank to come up with a capital conservation plan by the end of this month, the Italian newspaper said.

Banca Carige, which was not immediately available to comment, is not among the 48 major European banks whose European Banking Authority (EBA) stress test results are due to be published at 1700 GMT on Friday.

The ECB declined to comment on the Il Sole report, which said Carige’s CET1 capital ratio would fall below the threshold of 5.5 percent in the “adverse” scenario against which regulators are testing banks’ resilience.

The tests measure banks’ ability to withstand theoretical market shocks like a rise in political uncertainty against a backdrop of falling economic growth, a disorderly Brexit or a sell-off in government bonds and property.

Several Italian newspapers reported that all the four Italian lenders tested by the EBA — Intesa Sanpaolo (ISP.MI), UniCredit (CRDI.MI), UBI Banca (UBI.MI) and Banco BPM (BAMI.MI) — had cleared the tests without problems.

While there is no formal pass/fail mark, investors will check how much core capital lenders hold against the threshold of 5.5 percent under the test’s toughest scenario.

No bank among the major European Union lenders being tested is expected to fall below the 5.5 percent mark, but banks that are too close may come under market pressure.

Reporting by Francesca Landini; Editing by Edmund Blair and Alexander Smith

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