The ECB results of a comprehensive assessment

PBZ achieved excellent results and showed strong resilience in the adverse scenario

ZAGREB, 5 June 2020 - As part of the establishment of the close cooperation between the European Central Bank (ECB) and the Croatian National Bank (CNB) in the supervision of credit institutions, Privredna banka Zagreb d.d. (PBZ) a member of Intesa Sanpaolo Group, took part, along with four other Croatian banks, in the comprehensive assessment of banks conducted by the ECB.

Comprehensive assessment of banks comprised asset quality review (AQR) and stress test, i.e. testing of their resilience to shocks in a scenario assuming adverse macroeconomic developments (recession), unfavourable movement of interest rates, and substantial materialisation of credit, market, operational, and legal risks. The assessment was conducted on a consolidated level of the PBZ Group.

The results of the comprehensive assessment of Privredna banka Zagreb d.d. on a consolidated level were published by the ECB on 5 June 2020 (link: https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr200605~ca8b62e58f.en.html) and show that:

• asset quality review identified immaterial adjustments with an impact on the capital adequacy ratio of one basis point (1bp)
• testing of resilience to shocks pointed to an overall reduction in the capital adequacy ratio of 537 basis points, i.e. CET1 Ratio of 16.4% in the adverse scenario

Privredna banka Zagreb d.d. fully acknowledges these results and perceives them primarily as a confirmation of its financial stability, but also adequacy of its internal rules and procedures pertaining to risk management. The capital adequacy ratio of 16.4% under stressful macroeconomic conditions and after substantial shocks is indicative of an extreme resilience of the PBZ Group to unexpected events that substantially exceeds regulatory requirements. Also, these results confirm the stability and reliability of PBZ in the domestic banking market.