Dear Mr. Draghi, we are very sorry but we messed up on the 'stress test'. The Royal Bank of Scotland shares are sliding after it admitted that it made an error - not in favor the bank - in its stress test calculations...
*RBS: CET1 STRESS TEST RATIOS OVERSTATED ON CALCULATION ERROR
Under the corrected Adverse Scenario, RBS capital cushion was slashed from 6.7% to 5.7% (just barely above the 5.5% minimum). Still - we should all trust the stress tests as 'proof' how strong Europe's banking system is. What a farce!!
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As Bloomberg reports,
Royal Bank of Scotland Group Plc fell as much as 2.9 percent in London trading after the lender said it overstated its capital ratios in European stress tests.
RBS’s fully loaded 2016 common equity Tier 1 ratio, a measure of financial strength, should be 5.7 percent instead of the 6.7 percent reported on Oct. 26, the bank said in a statement today. That’s still above the 5.5 percent minimum, RBS said.
The stress-test modeling “did not adequately reflect” deferred tax asset deductions, RBS said. The bank said it remains “on target” to boost its capital ratio to 11 percent by the end of 2015.
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