Citibank’s Irish subsidiary passes capital assessment by ECB

Citibank's Irish subsidiary has passed a comprehensive assessment of its capital strength by the European Central Bank before becoming a so-called significant institution here from January 1st.

The ECB found that Citibank Holdings Ireland Ltd had a core equity tier 1 ratio of 14.69 per cent at the end of 2015. This reduced to 10.42 per cent when certain adverse scenarios were applied to its capital levels. This means it does not have a capital shortfall that needs to be plugged.

The threshold ratios applied by the ECB were maintained at the same levels as in tests from 2014 and 2015. This involved a CET1 ratio of 8 per cent for the baseline scenario and a ratio of 5.5 per cent for the adverse scenario.

In a statement Citibank said: "Citibank Holdings Ireland Ltd and its operating subsidiary, Citibank Europe Plc, have successfully completed the European Central Bank's comprehensive assessment, which has confirmed the capital strength of the entities, in both a baseline and adverse stress scenario.

“This is an important milestone for Citi in Europe, and we look forward to a strong engagement with the Single Supervisory Mechanism and our Joint Supervisory Team.”

Total assets

Citibank Holdings Ireland’s total assets were €46 billion at the end of last year. This puts it above the €30 billion threshold to become a significant institution in terms of being regulated by the ECB.

The increase in assets here followed a merger of its subsidiary in Ireland with UK-based Citibank International Ltd.

It now joins AIB, Bank of Ireland, Ulster Bank and Permanent TSB in being directly regulated by the ECB's Single Supervisory Mechanism.

This latest comprehensive assessment by the ECB included just four institutions. The others were Abanka of Slovenia, Rietumu Banka of Latvia, and Banca Mediolanum of Italy. Abanka and Banca Mediolanum both passed the test, while the Latvian bank did not consent to the disclosure of its results.

A comprehensive assessment is a requirement for all banks that become or are likely to become subject to direct ECB supervision. This test was conducted between March and November of this year.