British banks have shown the worst results in the latest European banking crisis situations. German and Italian banks are also difficult to come by. The European Banking Supervisor has developed a European Union (EU) scenario of severe economic recession that runs until 2020.
The European banking supervisor conducted this endurance test from January to October and examined the 48 largest European banks. The Latvian banks were not among them. The scenario predicted a severe recession – with a drop of more than 8%, with Brexit being one of the driving forces or Britain's withdrawal from the EU.
In general, it is estimated that bank stress has improved since 2008, but most European banks are the worst for the British people –
Lloyd's, Banks of Barclay and Royal Bank of Scotland. The banking stress scenario also predicted the worst situation in the UK economy. However, Deutsche Bank and several regional banks will suffer severely – for example, in the worst case scenario, the regulators would stop paying dividends and instead increase equity capital adequacy.
Some banking experts have pointed out – surprisingly, Italian banks have shown relatively good results. However, it is explained that the tests did not include the latest situation in the Italian economy.
None of the banks passed a test of endurance. The previous stress test was conducted two years ago and now it seems that banks have become more resilient to macroeconomic shocks.
These test results will help the bank supervisor decide whether to require these banks to increase their capital adequacy to protect themselves against potential losses.