UniCredit, for example, was requested by the ECB to have a 10.07 percent of Common Equity Tier 1 (CET 1) ratio as of March 1. At the end of 2018, the bank had a 12.13 percent CET 1 ratio.
Tier 1 capital ratio is the ratio of a bank’s core equity capital to its total risk-weighted assets. More simply, it’s the level of reserve funding that a bank can call on to mitigate against sudden shocks or losses.
Banco BPM said the ECB requested a CET 1 ratio of 9.31 percent this year. It also said that as of the end of 2018, its CET 1 ratio stood at 12.1 percent.
This data is not publicly disclosed by the ECB. Banks can decide whether to publish the requirements set by the regulators.
According to Kinmonth, Italian banks have been given requirements which are largely the same as those requested in the previous year, indicating that banks do not need to increase their capital positions.
“All the main banks now comfortably exceed the minimum thresholds set by ECB and therefore face no restrictions on dividend distributions, bonuses or capital coupon payments. The fact there is not an increase (which would be costly to a bank), is being taking as a positive by markets,” Kinmonth added.
Fabio Trussardi, analyst at UBS global asset management told CNBC Monday that share were higher because “the ECB decision means some theoretical capital relief (through lower capital requirement)…and because it means that the regulator is satisfied with the banks’ progress in the non-performing loans’ reduction.”
Since the start of the year, shares of UniCredit and Intesa Sanpaolo are up by about 6 percent and 4 percent respectively. Meanwhile, in the same time frame, shares of Banco BPM are down by 6 percent, while Ubi Banca is down 13 percent.