The EBA stress test results cannot be used to infer outcomes of the 2016 Bank of England (“BoE”) stress tests for UK banks. There are key distinctions between the two regulatory stress tests, including a static balance sheet assumption for the EBA exercise therefore a number of initiatives such as balance sheet reduction (including asset sales and divestments), business growth and cost savings are not factored into the stress outcomes.
The EBA stress tests, like those run by the BoE, currently include substantial stressed conduct and litigation charges in the adverse scenario only, primarily in relation to US RMBS.
Commenting on the results, Ewen Stevenson, Chief Financial Officer, said:
“The EBA stress test results demonstrate our continued progress towards transforming the balance sheet to being safe and sustainable. Over recent years we have materially strengthened our CET1 ratio, substantially reduced our balance sheet and leverage, and continued to de-risk our asset exposures.
We are confident that in delivering our strategy, we will transform RBS into a low risk, resilient bank.”
RBS will announce its 2016 Interim Results on Friday, 5th August 2016.
Click here to read more about the detailed results of the stress test, as well as information on RBS exposures to central, regional and local governments in the European Economic Area.