EU agrees key norms of tests for lenders
By Julien Toyer and Yves Clarisse |
July 17, 2010, Saturday
|
Print Edition
Print Edition
EUROPEAN Union governments have agreed the key criteria of stress tests for the bloc's banks, EU sources said yesterday, and senior policymakers voiced optimism about their results.
Under the agreement, each of the 91 banks being tested will publish its result next Friday, and the London-based Committee of European Banking Supervisors will issue a statement summing up the outcome a minute later, several sources said, asking not to be named.
The main criterion will be to have a certain minimum core tier 1 capital, a measure of banks' financial strength, in hypothetical adverse economic conditions. One source said banks would need a level of more than 6 percent to pass the test.
Exposure to sovereign debt risk will be the second indicator in order of importance.
The final details of the tests will be discussed next Thursday at a teleconference of senior finance ministry officials from EU countries and representatives of the European Commission and the European Central Bank.
International Monetary Fund chief Dominique Strauss-Kahn said the tests should not reveal any major problems among the big names, although it was possible that some smaller banks would have to be recapitalized.
"I get the feeling that what will come out will be rather reassuring, and that we'll see that all the big European banks are sufficiently solid to resist any earthquake," Strauss-Kahn told a French television station.
Jean-Claude Juncker, chairman of eurozone finance ministers, offered similar reassurance, telling Austrian newspaper Kurier in an interview: "I am not expecting any big catastrophes."
Under the agreement, each of the 91 banks being tested will publish its result next Friday, and the London-based Committee of European Banking Supervisors will issue a statement summing up the outcome a minute later, several sources said, asking not to be named.
The main criterion will be to have a certain minimum core tier 1 capital, a measure of banks' financial strength, in hypothetical adverse economic conditions. One source said banks would need a level of more than 6 percent to pass the test.
Exposure to sovereign debt risk will be the second indicator in order of importance.
The final details of the tests will be discussed next Thursday at a teleconference of senior finance ministry officials from EU countries and representatives of the European Commission and the European Central Bank.
International Monetary Fund chief Dominique Strauss-Kahn said the tests should not reveal any major problems among the big names, although it was possible that some smaller banks would have to be recapitalized.
"I get the feeling that what will come out will be rather reassuring, and that we'll see that all the big European banks are sufficiently solid to resist any earthquake," Strauss-Kahn told a French television station.
Jean-Claude Juncker, chairman of eurozone finance ministers, offered similar reassurance, telling Austrian newspaper Kurier in an interview: "I am not expecting any big catastrophes."
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