European Bank Stress Test Banks Fail
Published / Last Updated on 23/07/2010
European Bank Stress Test - Banks Fail
by Ashley Clark, Director
Seven banks in Europe have failed capital adequacy stress tests as set by the European Central Bank (ECB).
91 banks were tested and the seven are mainly Spanish, a German and Greek Bank.
Banca Civica, Cajasur, Diada, Espiga, Unnim from Spain alongside German bank Hypo Real Estate and the Greek ATEbank were the banks deemed most at risk.
The UK’s 4 leading banking groups Barclays, HSBC, Lloyds and RBS all passed the stress tests for market resilience in extreme market conditions although we suggest that these tests may not be that conclusive given that it is in the interests of the ECB to encourage confidence.
Sovereign debt confidence reigns and given that many of the major banks are in fact fully or part state owned, these results do not breed any confidence in the banking system in general and until government spending is controlled and new bank capital adequacy rules start in 2012, volatility in both the “bond market” and banking stocks is likely to continue for sometime.
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