SOCIETE GENERALE HAS SUCCESSFULLY PASSED THE COMPREHENSIVE ASSESSMENT OF EUROPEAN BANK BALANCE SHEETS
CONFIRMATION OF THE GROUP'S FINANCIAL SOLIDITY
Paris, 26 October 2014 |
SOCIETE GENERALE HAS SUCCESSFULLY PASSED THE COMPREHENSIVE ASSESSMENT OF EUROPEAN BANK BALANCE SHEETS: CONFIRMATION OF THE GROUP'S FINANCIAL SOLIDITY |
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Asset quality review: confirmation of the quality of asset portfolios and risk management models
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Very limited normative adjustment with regard to the size of the balance sheet of -22 basis points on the Common Equity Tier 1 ratio([1]) at end-2013, with no impact on the Group's ratios
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Central scenario: Common Equity Tier 1 ratio(1) of 10.6%
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Adverse scenario: Common Equity Tier 1 ratio(1) of 8.1%
The European Central Bank (ECB) and European Banking Authority (EBA) have today published the results of the Asset Quality Review and Stress Tests which the largest European banks have had to
undergo. Prior to the ECB's single supervisory mechanism in the eurozone, these two stages of the comprehensive assessment of bank balance sheets have resulted in the large-scale mobilisation of
employees: for nearly a year, more than 800 Societe Generale employees were involved; a hundred or so inspectors mandated by the supervisory authorities analysed 9 million credit lines and 500
million data.
Based on very demanding methodologies, these exercises confirm the solidity of Societe Generale's balance sheet as well as the resilience of its diversified universal banking model.
Results of the asset quality review: quality of asset portfolios and risk management models
The ECB and French Prudential Supervision and Resolution Authority (ACPR) first carried out an in-depth review of the bank's accounting methodologies. The regulators subsequently selected and reviewed nearly half the Group's exposures using a methodology specific to the ECB, determined for the purposes of the exercise, covering principally the provisioning of credit risks and the valuation of market risks.
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The controls and simulations carried out would have resulted, at 31 December 2013, in a very limited theoretical normative adjustment of -22 basis points on the Common Equity Tier 1
ratio(1), with -20 basis points in respect of credit risk and -2 basis points in respect of market risk.
In prudential terms, these results do not modify the Group's ratios, both in respect of 2013 and for following years. From an accounting viewpoint, this review will have no significant impact on
the Group's financial statements (less than EUR 30 million before tax on profits and less than EUR 35 million in other capital items). These results underline the quality of the Group's asset
portfolios and testify to the rigour of its methodologies and risk management.