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European bank stress test results due on July 23
July 4, 2010 / 7:57 AM / 7 years ago

European bank stress test results due on July 23

AIX-EN-PROVENCE, France (Reuters) - The result of tests designed to show that Europe’s banks are able to cope with further economic and other shocks will be published on July 23, French Economy Minister Christine Lagarde said on Sunday.

Europe’s banking watchdogs have been running the stress tests to boost confidence in the sector as it emerges from the financial crisis to face mounting pressure from tighter capital requirements, extra taxes and additional regulation.

“You will soon be seeing the number of banks that will be submitted to the stress test, you will have better understanding of the exact criteria we apply and of how heavily we stress the system, and then later on July 23rd, the result of the stress test will be issued,” Lagarde told reporters on the sidelines of a conference.

“And you will see that banks in Europe are solid and healthy,” she added. Asked about French banks, she said: “I‘m not worried about my banks.”

Simulated tests carried out by analysts showed KBC, National Bank of Greece, Commerzbank, Credit Agricole and Dexia fared more poorly than big rivals, but without falling to danger levels.

Dexia chief executive Pierre Mariani said the bank received details about the tests recently.

“The criteria upon which the stress tests are to be based were communicated to us at the end of the week,” Mariani told Reuters. “We are examining them.”

Mariani declined to comment on the details of the criteria, nor would he say how Dexia might fare.

Banking regulators have already been testing the resilience of 25 big EU lenders to an economic downturn and rising loan losses. Sources have told Reuters that the tests will be expanded to more than 100 across the region, with the tests also covering risks from banks’ sovereign debt holdings.

While some analysts have said the stress tests should restore confidence in the sector and lead to a recapitalisation of weaker banks, others have said the exact criteria of the sovereign stress needs to be disclosed if the tests are to convince the market.

Reporting by Jean-Baptiste Vey, Matthias Blamont and Lionel Laurent, editing by Marcel Michelson and Will Waterman

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