Stress tests show Czech banks resilient to shocks.

By bne IntelliNews August 31, 2011
Czech banking sector is sufficiently resilient to adverse developments as the banks capital adequacy would stay above the regulatory minimum of 8% even in a very improbable stress scenario, the central banks August 2011 stress tests showed. In the worst projected scenario, called Recession, several banks would need to raise capital by a total of CZK 13.4bn, accounting for less than 0.4% of GDP. This scenario assumes a drop in economic activity as a result of a renewed recession in the Czech Republics main trading partners, an escalation of the euro area financial crisis and increased financial market volatility. The banking sectors stability is based on its high capital adequacy ratio of 15.9% as of end-June 2011.

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