Friday, July 15, 2011

Eight Banks Fail European Stress Tests

by Calculated Risk on 7/15/2011 12:20:00 PM

Here is the page for the European Banking Authority (EBA)

EBA Press release (pdf)

Stress Test Summary report (pdf)

From the WSJ: 8 Banks Fail EU 'Stress Tests'

Eight banks flunked the European Union's "stress tests," with a combined shortfall of €2.5 billion ($3.54 billion) in capital under a simulated worst-case economic scenario, the European Banking Authority said.

The EU regulator said Friday that another 16 banks narrowly passed the tests, which examined the abilities of 90 top lenders across Europe to endure a deteriorating economy and strained financial system.

By awarding a relatively clean bill of health to the vast majority of Europe's banking industry, the tests are likely to be greeted with skepticism.
Only €2.5 billion in capital needed? And the banks are reported to hold an aggregate €1.1 trillion euros in government debt from Greece, Ireland, Portugal and Spain? I think investors will remain skeptical.