On 14 November, the ECB released the results of the test on Novo Banco: it passed in the base scenario but failed in the more adverse scenario - implying a sharp economic downturn and rising unemployment. Its CET1 capital ratio would then be 2.4 percentage points below the required minimum, of 5.5 percent.
Under ECB rules, the bank had two weeks to submit a plan with measures to reinforce its capital base that it must now put into practice within nine months - that is by next summer.
According to Portuguese press reports, the plan contains measures that would involving more than the €1.4 billion formally required under ECB rules.
Novo Banco is the ‘good bank’ that was spun out of BES after the Bank of Portugal took over the latter in August and broke it up. Its sole shareholder is a banking sector resolution fund, which was able to pump fresh capital into it only thanks to a massive state loan.