DNB Bank Capital Update

EU-Wide Stress Test Results

DNB Bank passes the EU-wide stress test with good margin. The solid performance is due to a robust Norwegian economy, a strong capital position, a low risk profile and no exposure to debt-ridden sovereigns in the Euro-zone.

DNB Bank was subject to the 2011 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with the Norwegian FSA (Finanstilsynet), the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB).
DNB Bank notes the announcements made today by the EBA and Finanstilsynet on the EU-wide stress test and fully acknowledges the outcomes of this exercise.
The EU-wide stress test, carried out across 91 banks covering over 65% of the EU banking system total assets, seeks to assess the resilience of European banks to severe shocks and their specific solvency to hypothetical stress events under certain restrictive conditions.
The assumptions and methodology were established to assess banks’ capital adequacy against a 5% Core Tier 1 capital benchmark and are intended to restore confidence in the resilience of the banks tested. The adverse stress test scenario was set by the ECB and covers a two-year time horizon (2011-2012). The stress test has been carried out using a static balance sheet assumption as at December 2010. The stress test does not take into account future business strategies and management actions and is not a forecast of DNB Bank profits.
As a result of the assumed shock, the estimated consolidated Core Tier 1 capital ratio of DNB Bank would change to 9.0% under the adverse scenario in 2012 compared to 8.3% as of end of 2010. DNB Bank will produce significant positive results even under the adverse scenario, and combined with the static balance sheet assumption, this explains why DNB shows a strengthening of the Core Tier 1 ratio.  
The EU-wide stress test requires that the results and weaknesses identified, which will be disclosed to the market, are acted on to improve the resilience of the financial system. Following completion of the EU-wide stress test, the results determine that DNB Bank meets the capital benchmark set out for the purpose of the stress test. The bank will continue to ensure that appropriate capital levels will be maintained.

» Results of the 2011 EBA EU-wide stress test - Summary for DNB Bank ASA (xls)
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