Subsequently, we have concluded that virtually all of the banks within this group that have actually become distressed had been identified beforehand using this relatively simple method. The Danish Financial Supervisory Authority was aware of this and included it in its supervisory activities.
The return on equity of significant euro area banking groups still remains well below their cost of capital. Market valuations point to an expectation of subdued earnings prospects going forward. And further signs of weakness have emerged in response to the different episodes of financial market turbulence since the start of 2016, which saw euro area banks’ price-to-book ratios particularly hard-hit.