Sydbank — Audit Report / Information 2015

Jul 29, 2016

Aabenraa, Denmark, 2016-07-29 22:00 CEST (GLOBE NEWSWIRE) --
The 2016 stress test was conducted by the European Banking Authority (EBA) in
cooperation with national authorities, the European Central Bank (ECB), the
European Commission and the European Systemic Risk Board (ESRB). From Denmark
the Danish FSA participated as the national authority.

The stress test seeks to assess the resilience of European banks, including the
banks’ capital resources, to severe shocks under hypothetical adverse
scenarios.

The EBA’s EU-wide stress test covers a sample of 51 banks. Sydbank was not
among these 51 banks but the Danish FSA has decided to conduct a similar stress
test as regards Sydbank.

The stress test is based on the EBA’s common methodology and guidelines as
described in the EBA’s Methodological Note. Neither the result of the baseline
scenario nor the result of the adverse scenario can be construed as Sydbank’s
forecasts or be compared to other information published by Sydbank.

The stress test uses a baseline scenario and an adverse scenario that cover the
period 2016-2018.

The baseline scenario is based on the European Commission’s forecast from
November 2015.

The adverse scenario has been designed by the ESRB and reflects the systemic
risks that are currently assessed as representing the most pertinent threats to
the stability of the EU banking sector.

The assumptions and methodology were developed to assess banks’ capital
adequacy under the baseline scenario and the adverse scenario, respectively.

Sydbank is pleased that the EU-wide stress test has been conducted and with the
Group’s individual results indicating:

-- great resilience to adverse economic developments in the period 2016-2018
-- no appreciable exposure to governments and banks in countries with
increased risk
-- a very robust capital structure.

The most significant capital ratios represent:

     Percentage of total risk exposure (RWA)               Common      Total
                                                           Equity     capita
                                                           Tier 1        l  
                                                           capital

31 Dec 2015 14.5 17.6
Baseline scenario year-end 2018 16.6 19.4
Adverse scenario, year-end 2018 transitional CRR/CRD IV 12.6 15.3
Adverse scenario, year-end 2018 fully loaded CRR/CRD IV 12.6 14.8
Capital requirement adverse scenario, year-end 2018 8.1 12.4
transitional CRR/CRD IV
Capital requirement adverse scenario, year-end 2018 fully 9.0 13.2
loaded CRR/CRD IV
Excess cover, year-end 2015 8.1 7.7
Excess cover adverse scenario, year-end 2018 transitional 4.5 2.9
CRR/CRD IV
Excess cover adverse scenario, year-end 2018 fully loaded 3.7 1.6
CRR/CRD IV

Under the adverse scenario the capital requirement has been calculated as the
minimum requirement + Pillar II add-on (calculated at year-end 2015) + capital
conservation buffer + SIFI buffer. 56% of the Pillar II add-on is included in
the calculation of the CET1 capital requirement.

Detailed results
The detailed results of the stress test under the baseline and adverse
scenarios as well as information on banks’ credit exposures and exposures to
central and local governments are provided in the accompanying disclosure
templates based on the common format provided by the EBA.

Further information
See more details on the scenarios, assumptions and methodology on the EBA
website:

http://www.eba.europa.eu/risk-analysis-and-data/eu-wide-stress-testing/2016.