July 15, 2011 / 4:23 PM / 8 years ago

German banks blast EBA stress test

FRANKFURT (Reuters) - Germany’s banks accused the European Banking Authority (EBA) of politically influenced, arbitrary decision-making in the way it conducted a bank stress test as 12 of 13 lenders in the country passed.

Earlier this week, Frankfurt-based Helaba ruled itself out of the stress test of 91 European lenders after the EBA at the last minute refused to acknowledge an improvement in the quality of its capital.

“The European stress test has not contributed toward building trust in a sufficient manner,” said Heinrich Haasis, head of the association of German savings banks. “Arbitrary benchmarks were applied to achieve political goals.”

The Association of German Banks, which represents Deutsche Bank and Commerzbank, said it was “not comprehensible” that Helaba’s improved capital position was not fully taken into account by the EBA when it conducted the tests.

Paul Lerbinger, chief executive of HSH Nordbank, said ignoring contractual guarantees given by HSH’s owners Hamburg and Schleswig Holstein failed to convey the bank’s ability to withstand shocks.

“The result in no way reflects economic reality.”

The EBA’s test only allows banks to mitigate any shortfalls in capital with plans for raising pure equity or mandatory restructuring plans agreed between January and the end of April.

Germany’s Bundesbank said on Wednesday that Helaba holds sufficient capital and that its amended hybrid debt meets tougher new global bank capital standards, known as Basel III, that take effect from 2013.

State-controlled banks HSH Nordbank and NordLB scraped through the stress test, with a core Tier 1 capital ratio of 5.5 percent and 5.6 percent, respectively, based on the test’s adverse scenario. Both were just above the 5 percent threshold needed to pass the test.

Reporting by Kathrin Jones; writing by Edward Taylor

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