ECB Concludes Asset Quality Reviews of Building Societies LBS Süd and Wüstenrot
Summary
ECB published results of asset quality reviews of building societies LBS Landesbausparkasse Süd and Wüstenrot Bausparkasse AG. AQRs focused on credit risk and identified CET1 capital ratio depletions of 137 basis points (LBS Süd) and 98 basis points (Wüstenrot). No capital shortfalls were identified as AQR-adjusted ratios remain above capital requirements.
What changed
ECB conducted asset quality reviews of two German building societies (Bausparkassen) classified as significant supervised entities due to assets exceeding €30 billion. The AQRs focused on credit risk and found that both banks only recognized credit risk when loans were granted, whereas ECB determined credit risk arises when clients become eligible under Bauspar contracts. This methodology difference accounted for 109bp of LBS Süd's 137bp CET1 depletion and 64bp of Wüstenrot's 98bp depletion.
Banks and compliance teams should note that while no capital shortfalls were identified, the AQR-adjusted CET1 ratios (16.06% for LBS Süd, 16.71% for Wüstenrot) remain above regulatory requirements. However, the ECB expects both institutions to follow up on identified weaknesses and address the credit risk recognition methodology gaps. Results will inform ongoing supervision and the Supervisory Review and Evaluation Process.
What to do next
- Monitor for follow-up supervisory measures based on AQR findings
- Review credit risk recognition practices for Bauspar contracts
- Consider AQR outcomes in internal capital planning
Archived snapshot
Apr 9, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
- PRESS RELEASE
ECB concludes asset quality reviews of building societies LBS Süd and Wüstenrot
9 April 2026
- ECB conducted asset quality reviews of two building societies (Bausparkassen) after classifying them as significant
- Exercises focused on credit risk
- No capital shortfalls were identified The European Central Bank (ECB) today published the results of its asset quality reviews (AQRs) of LBS Landesbausparkasse Süd (LBS Süd) and Wüstenrot Bausparkasse AG (Wüstenrot).
The ECB classified the two banks as significant because the total value of their assets exceeded the threshold of €30 billion. As a result, the ECB began directly supervising Wüstenrot in January 2024 and LBS Süd in January 2025.
Supervisors carry out AQRs to review banks’ asset valuations from a prudential perspective, increase transparency regarding their exposures and assess the adequacy of their capital levels. The AQRs of LBS Süd and Wüstenrot focused on credit risk.
The results will inform ongoing supervision of the banks and will lead to supervisory measures to address identified weaknesses. The results will also be considered in the Supervisory Review and Evaluation Process, which assesses the individual risk profiles of supervised banks.
The results of the AQRs show a depletion of the Common Equity Tier 1 (CET1) capital ratio by 137 basis points for LBS Süd and by 98 basis points for Wüstenrot. A bank’s CET1 ratio is a key measure of its financial soundness.
This impact mostly stems from the fact that the banks only recognised credit risk once a loan was granted, whereas credit risk arises at least as soon as a client becomes eligible for a loan under a ‘’Bauspar”-contract. This finding led to a depletion of the CET1 ratio by 109 basis points for LBS Süd and by 64 basis points for Wüstenrot. The rest of the CET1 ratio depletion stems from credit file review findings, including additional provisioning needs.
As the banks’ AQR-adjusted CET1 ratios do not fall below their capital requirements, they do not face a capital shortfall.
The banks consented to the disclosure of the results. The ECB expects the banks to follow up on the outcome of the AQRs.
Results of the asset quality reviews
| Bank | Starting point CET1 ratio | AQR impact | AQR-adjusted CET1 ratio |
| --- | --- | --- | --- |
| LBS Landesbausparkasse Süd | 17.43% | -137 basis points | 16.06% |
| Wüstenrot Bausparkasse AG | 17.69% | -98 basis points | 16.71% |
More detailed results and information on the outcome of this exercise can be found in the disclosure templates shared in annexes to this press release.
For media queries, please contact Lina Bennar , tel.: +49 152 06556600.
Notes
- Banks recently classified or likely to soon be classified as significant undergo an asset quality review.
- The ECB has directly supervised Wüstenrot Bausparkasse AG since 1 January 2024 and LBS Landesbausparkasse Süd since 1 January 2025. CONTACT ## European Central Bank
Directorate General Communications
- Sonnemannstrasse 20
- 60314 Frankfurt am Main, Germany
- +49 69 1344 7455
- media@ecb.europa.eu Reproduction is permitted provided that the source is acknowledged.
Media contacts Annexes 9 April 2026 Disclosure template: Wüstenrot Bausparkasse AG 9 April 2026 Disclosure template: LBS Landesbausparkasse Süd
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