CNB: banking sector resilient enough to withstand recession

The Czech National Bank says the banking sector is resilient enough to face even very unfavourable developments. The central bank’s latest stress tests using data leading up to the end of 2011 reportedly prove the “strong capitalisation, profitability and balance sheet liquidity that are the foundations of the stability and resilience of Czech banks”. In the coming three years, the banks would keep their aggregate capital adequacy above the required 8 percent, even in the event of a deep recession in Europe. Some banks would have to raise capital, however. The capital adequacy of the Czech banking sector stood at 15.2 percent at end-2011.