(Bloomberg) -- Deutsche Bank AG and Societe Generale SA emerged among the weakest of the large European lenders in a stress test that regulators will consult when vetting plans on investor payouts.

The German lender’s common equity tier 1 ratio, one of the most important measures of financial strength, fell 620 basis points to 7.4% in an adverse scenario that assumes a prolonged period of low interest rates and a steep contraction of the economy over three years. Societe Generale’s ratio dropped 562 basis points to 7.5%.

The tests, which examined 50 banks in the region, don’t have a pass or fail grade, but they guide the European Central Bank and other regulators in assessing the financial system’s capital needs, as well as the appropriateness of dividend levels and staff bonuses at the banks they supervise. The ECB announced earlier this month that economic conditions have brightened enough for it to lift the restrictions on dividends in September.

The EBA’s adverse scenario showed banks on aggregate are better prepared after the pandemic to deal with a severe economic crisis than they were three years ago. They built up a CET1 ratio of 15% at the end of last year, the highest since the European Banking Authority started its tests. The measure dropped to 10.2% in the adverse scenario, slightly better than in the last round of simulations three years ago.

“Banks have continued building up their capital base,” the EBA wrote in a release late Friday. “This was achieved despite an unprecedented decline of the EU’s GDP and the first effects of the Covid-19 pandemic in 2020.”

But the EBA also pointed to dispersion in individual banks’ results, with lenders focused on domestic activities or with lower interest income worst hit.

Italy’s Banca Monte dei Paschi di Siena SpA saw its CET1 ratio slump to a negative 0.1% in the adverse scenario, the worst among the lenders sampled. The world’s oldest bank, still state-owned after a bailout, is now in talks about being acquired by UniCredit SpA, according to a statement late Thursday.

BNP Paribas SA, one of the lenders worst hit by the ECB’s dividend restrictions, saw its ratio drop to 8.2%, slightly better than SocGen and Deutsche Bank. Its among ten of the biggest euro-area banks that have more than 22 billion euros ($26 billion) set aside to reward shareholders, according to calculations by Bloomberg. Banco Bilbao Vizcaya Argentaria SA, ING Groep NV, Intesa Sanpaolo SpA and Nordea Bank Abp also have big reserves.

Dividends became a bone of contention in Europe after the ECB imposed a de-facto ban on payouts at the start of the pandemic, a trade-off for extensive regulatory relief granted to ensure credit kept flowing to businesses hurt by the crisis. Some bank executives have criticized the decision, saying it impaired their ability to raise capital because it’s made banks less attractive for investors.

The ECB has said it will “assess the capital and distribution plans of each bank” individually, indicating that the removal of the cap doesn’t mean it will allow banks to set payout levels at will. The 2021 stress test results will factor into those talks, it said.

When the ECB lifted the dividend cap, it also renewed its call on banks to tread carefully on bonus payments as part of its effort to keep banks from making large discretionary payouts to staff or investors that would deplete their capital cushions. The supervisor earlier this rejected the compensation plans of several banks including BNP Paribas, Deutsche Bank AG and UniCredit SpA, forcing them to cut their bonus pools, Bloomberg News has reported.

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