EU bank stress test results due

The European Banking Authority (EBA) is set to publish the results of stress tests of 90 banks across Europe later.

The tests are designed as a financial healthcheck and aim to ensure banks have sufficient capital to withstand difficult economic scenarios.
Some say the tests are not strict enough, despite changes made after only seven out of 91 banks failed last year.
On Wednesday, German bank Helaba said it expected to pull out of the stress tests to avoid public failure.
It said it would have passed the test if regulators counted a debt-equity hybrid, called "silent participation", as a capital reserve, but the EBA, having initially said it would accept this, then changed its mind.
The bank said it was not allowing the EBA to publish its data and therefore expected to be excluded from the tests.

Last year, both Irish banks tested, Bank of Ireland and Allied Irish Bank (AIB), were given a clean bill of health. But just months later, AIB needed a government bail-out.

The ratings agency Standard & Poor's has suggested the latest tests could still have been more severe.
"We consider that the European Banking Authority has pitched its stress scenarios at a level that attempts to be sufficiently tough to reassure markets, but not so stringent as to suggest material capital shortfalls," the agency said in a note.
"We consider that a moderately harsher scenario would add greater value in terms of assessing the resilience of the European banking sector."
Francis Fitzherbert-Brockholes, a banking and capital markets partner at law firm White and Case, also questioned the terms of the tests.
"Although the tests are apparently more robust now, they still do not assume a sovereign debt default, only a sovereign debt downgrade," he said.

Posted in: bu