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ECB’s Monte Paschi Capital Bar Would Trip Up 10 Other EU Banks

  • Italian government plans bailout of world’s oldest lender
  • Capital demands could face challenge in state-aid negotiations

Deutsche Bank AG, UniCredit SpA and eight other European Union banks would fall short of the European Central Bank’s capital demands on Banca Monte dei Paschi di Siena SpA based on stress-test results, highlighting potential objections to the plan.

The ECB told Monte Paschi it needed enough capital to push its common equity Tier 1 ratio to 8 percent of risk-weighted assets in the adverse scenario of the stress test, the Bank of Italy said in a statement late on Dec. 29. That’s well above the legal minimum of 4.5 percent. This year’s health check had no pass mark, but in 2014 lenders were held to a CET1 ratio of 5.5 percent.