By Laurence Norman
BRUSSELS--The two Belgian financial firms that failed the
European Central Bank and European Banking Authority stress tests
said they had no need to raise further capital as a result of the
outcome.
Belgium's AXA Bank Europe said Sunday it had carried out a
225-million-euro ($285 million) capital injection last month which
addressed its capital shortfall.
The bank failed the adverse-scenario ECB stress test, with the
ECB saying it would have a 3.4% Common Equity Tier 1 capital ratio
in the adverse scenario in 2016, well below the 5.5% required.
However the bank said that last month its parent company
injected 135 million euros in common equity Tier 1 capital and a
90-million-euro intragroup Contingent Convertible bond, which
addressed its capital needs.
"AXA Group (CS.FR, AXAHY) has anticipated the outcome of the
adverse macro scenario of the ECB stress test by providing the
necessary capital resources for AXA Bank Europe to comply with the
ECB" requirements, the bank said in a press release.
The bank said that "no additional measures to strengthen the
solvency position" of AXA Bank Europe are required.
The bank said that following the capital injection it has
overall Tier 1 capital of 992 million euros and a forecast Tier 1
capital ratio of 20.8% as of Sept. 30.
The bank said two legacy portfolios had a significant impact on
the stress test result--a structured-bonds portfolio which the bank
has been running down since 2008 and was completely sold last
month; and a mortgage-credit portfolio in Hungary which the bank
has been running down since 2011.
Dexia SA (DEXB), the other Belgian bank that failed the adverse
scenario of the stress test, said that no remedial action or state
aid was required by the ECB and the EBA after the test. Dexia is
being wound down under a resolution plan approved by European Union
authorities in 2012.
The bank said it had already boosted its 195-million-euro common
equity Tier 1 capital by asset sales in the first three quarters of
this year. It also said the adverse scenario test didn't take into
account the benefits of a measure granted on the valuation of its
sovereign securities holdings.
The ECB and the EBA confirmed Sunday that taking into account
the orderly resolution plan of Dexia, which benefits from a
government guarantee, there is no need for the bank to raise
further capital.
Write to Laurence Norman at Laurence.Norman@wsj.com