Bank of Valletta said that it was one of around 100 banks in the Eurozone chosen by the EU to be assessed for resilience in the face of simulated stressful economic conditions.

The original plan was to test twelve major banks in Europe, however market pressure for a wider reading into the banking system led to the widening of this sample to around 100 banks across the Eurozone. The stress testing in Europe follows a similar exercise carried out in February 2009 across the major US banks.

Criteria for selection required every country in the zone to be included, and that at least 50% of the banking sector of each country be covered. BOV was selected as the only bank in Malta that could fulfill both requirements simultaneously.

The stress testing is being executed for the EU by the Committee of European Banking Supervisors (CEBS). In Malta the exercise is being conducted by the Central Bank and the MFSA. BOV is collaborating closely with these institutions, providing all data that will allow the successful completion of the exercise within the tight timeframe specified by CEBS.

“BOV is entirely confident that it will emerge from the stress testing fully compliant with the Tier 1 levels (shareholder’s capital) defined as being required by the ECB. We are very comfortable with the quality of both our loan book and our investment book, where we hold a wide spread of top quality assets. Bank of Valletta’s Financial Markets book has stood the test of the unparalleled market crises during 2008 and 2009. There is no doubt in our minds that the Bank will emerge from a simulated stress scenario with a Tier 1 Capital ratio comfortably in excess of the minimum levels being specified by the ECB,” stated Mr Chalmers, Chairman of BOV.

Referring to this as being akin to a routine exercise carried out by the Bank, Tonio Depasquale, CEO of BOV, stated that, “This is not a surprise or a challenge for BOV. We carry out stress testing on a regular basis as a matter of course and as an integral part of our risk management and capital planning assessments. It forms part of our contingency planning process, and having it carried out by independent regulators under the auspices of CEBS strengthens the authenticity and transparency with which we operate.”

The results of the Europe-wide stress testing will be published on July 23, making both nation-specific as well as Bank-specific data available to the public.

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