Investors place confidence in EU banks
By Joel Dimmock |
July 27, 2010, Tuesday
|
Print Edition
Print Edition
INVESTORS gave European banks the benefit of the doubt yesterday over stress tests that prompted more transparency from Spanish banks needing to raise capital than from German banks cagey about sovereign debt.
Spain's smaller regional lenders started a roadshow in London aimed at reassuring investors after test results last Friday showed five of their peers were among seven banks to fail.
However, their problems have long been flagged and are being remedied, and Europe's banking index rose 1.1 percent yesterday to help the wider stock market push 0.2 percent higher.
The euro firmed slightly in the absence of any real shocks in the test of whether 91 banks in 20 countries could withstand another recession in the next two years, including some losses on government bonds.
Skepticism still lingered over the assessment that the seven banks that failed had a combined capital shortfall of 3.5 billion euros (US$4.5 billion), much smaller than expected.
Some German banks, including Deutsche Bank, were also criticized for not providing as much information as rivals about their exposure to sovereign debt in the eurozone - the major worry that prompted the tests.
Spain's smaller regional lenders started a roadshow in London aimed at reassuring investors after test results last Friday showed five of their peers were among seven banks to fail.
However, their problems have long been flagged and are being remedied, and Europe's banking index rose 1.1 percent yesterday to help the wider stock market push 0.2 percent higher.
The euro firmed slightly in the absence of any real shocks in the test of whether 91 banks in 20 countries could withstand another recession in the next two years, including some losses on government bonds.
Skepticism still lingered over the assessment that the seven banks that failed had a combined capital shortfall of 3.5 billion euros (US$4.5 billion), much smaller than expected.
Some German banks, including Deutsche Bank, were also criticized for not providing as much information as rivals about their exposure to sovereign debt in the eurozone - the major worry that prompted the tests.
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