Nevertheless, the profitability of EU banks at mid-2002 was not much below the average between1995 and 1999 and the level of provisioning is still in line with what tends to be normal provisioning levels in an economic downturn. EU banks’ solvency levels have remained unaffected in all size groups of EU banks, allowing them to withstand the shocks in their operating environment.
The aggregated total regulatory capital ratio for the EU banking system as a whole in 2001 stood at 12%, i.e. well above the required minimum level of 8%. EU banks have made efforts not only to maintain but also build up capital levels.