AIB and Bank of Ireland among Europe's worst performing banks in latest stress tests

Irish lenders AIB and Bank of Ireland have been ranked amongst the bottom banks in the latest stress tests of European banks.

The European Banking Authority carried out the research to assess whether financial institutions have enough resources to deal with another major economic crash, if it were to happen again.

The 'stress tests' are aimed at boosting the flow of credit to Europe's economy.

AIB and Bank of Ireland are among the bottom of the stress-test rankings compiled by the London-based European Banking Authority, which looked at 51 institutions across 15 countries.

The two Irish banks did not fail the test, which has a baseline of 5.5%. They were both in excess of that figure.

In a statement AIB said it was "well capitalised" and was "generating capital" again. It added the stress tests were based on its 2015 balance sheet strength. Bank of Ireland said only that it noted the results, and has not yet expanded on that statement.

Owen Callan of investments and brokerage firm Cantor Fitzgerald said the findings are not of too much concern and needed to be taken in context.

"From the results issued this week, the Irish banks are all profitable and are all creating capital. They're all in a much better situation that they were a couple of years ago.

"(These) stress tests are perhaps a realisation that there are still some issues to be dealt with, in particular the large stock of non-performing and defaulted loans that the banks are carrying."


 

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