Bank Stress Tests Methodology Revealed
Apart from the three systemic banks or banking groups (NLB, NKBM and Abanka), seven other banks have also been included in the review based on certain criteria. These are Gorenjska banka, Banka Celje, Unicredit banka Slovenije, Hypo Alpe Adria Bank, Raiffeisen bank, as well as Probanka and Factor banka, the latter two in a limited extent in accordance with the orderly wind down process at the banks.
Bottom up stress tests comprise three key assessment elements: an assessment of the bank's loss-absorption capacity, an assessment of the bank's losses from performing, non-performing and restructured claims, as well as an assessment of the bank's solvency position under baseline and adverse scenarios in line with the surplus or deficit of the bank's loss absorption capacity.
The goal of the bottom up stress is to assess potential capital needs of the Slovenian banking system and individual banks in a baseline and adverse scenario, Banka Slovenije said.