Asset Quality Review of LBS Süd and Wüstenrot building societies completed
The European Central Bank has published the results of its Asset Quality Reviews for LBS Landesbausparkasse Süd and Wüstenrot Bausparkasse AG. No capital shortfalls were identified for either building society.
CET1 ratios impacted by AQR findings
The European Central Bank (ECB) has concluded its Asset Quality Reviews (AQRs) for LBS Landesbausparkasse Süd and Wüstenrot Bausparkasse AG.
These banks became significant institutions, exceeding €30 billion in assets, and are under direct ECB supervision since January 2024 (Wüstenrot) and January 2025 (LBS Süd).
The AQRs focused on credit risk.
Findings indicate a reduction in the Common Equity Tier 1 (CET1) ratio by 137 basis points for LBS Süd and 98 basis points for Wüstenrot.
This largely stems from a re-assessment of credit risk recognition for building loan contracts, contributing 109 basis points (LBS Süd) and 64 basis points (Wüstenrot) to the reduction.
Crucially, both institutions' AQR-adjusted CET1 ratios remained above their capital requirements, confirming no capital shortfalls.
The ECB expects the banks to follow up on the AQR findings.
Supervisory follow-up initiated
The AQR results will now feed into the ongoing supervision of both banks and will lead to specific supervisory measures to address identified weaknesses.
These findings will also be incorporated into the Supervisory Review and Evaluation Process (SREP), which assesses the individual risk profiles of supervised banks.
The ECB expects the institutions to actively implement the recommendations stemming from these reviews.
More detailed results and information on this review are available in the annexes of the English version of the press release on the ECB's banking supervision website.