May 16, 2014 / 9:27 AM / 4 years ago

Carige CEO says to use internal rating model in stress tests

MILAN, May 16 (Reuters) - Regulators have authorised Banca Carige to use capital-boosting internal rating models when running stress-tests on its balance sheets in this year’s review of lenders across the euro zone, the Italian bank’s chief executive said on Friday.

CEO Piero Montani told analysts during a conference call that the bank - whose core capital ratio is currently one of the lowest among Italy’s top 15 banks at 6.5 percent - had estimated such risk-assessment models could help add between 80 and 120 basis points to its capital base.

European regulators will be running stress-tests on 130 European banks as part of a check-up of the sector before the European Central Bank takes over supervision in November.

“We’ve been authorised to use these methods in the stress-test analysis,” Montani said.

“This applies to all banks ... but I see it as positive sign that they did not prevent us from using (the advanced internal ratings-based approach), it is a good sign ... that bears testimony to the validity of the model,” he said.

Several Italian banks are waiting for the Bank of Italy to validate their internal-rating models.

Reporting by Valentina Za

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