Things Could Be Worse But They Could Also Be A Lot Better At Monte Paschi Right Now

One the one hand, thanks to this year's tests no longer being pass/fail, the Italian bank doesn't have a giant, gleaming 'F' next to its name.

“The EBA’s stress test is not a pass or fail exercise,” Andrea Enria, chairman of the EBA, said in a statement releasing the results Friday. “Whilst we recognize the extensive capital raising done so far, this is not a clean bill of health. There remains work to do.”

On the other...

Banca Monte dei Paschi di Siena SpA was the worst performer in European regulators’ stress tests, the only lender to have its capital wiped out in the exam, as the region struggles to contain an Italian banking crisis. Monte Paschi’s common equity tier 1 capital ratio, a measure of its resilience, dropped to a negative 2.2 percent in the adverse economic scenario, according to the results of the test, which put lenders through a simulation of a severe recession over three years.

Monte Paschi Capital Wiped Out in European Bank Stress Test [Bloomberg]