German lender pulls out of EU bank stress tests as results loom

GERMAN public sector bank Helaba said last night that it would not allow the European Banking Authority (EBA) to publish the results of stress tests on the bank, withdrawing from the process and potentially setting a precedent for other lenders to do the same.

Helaba had earlier said that it would have passed tests if regulators counted a debt-equity hybrid – or silent participation – as a capital reserve.

Having initially said it would accept Helaba’s silent participation after design modifications, the EBA in the end opted not to do so, the lender said.

Germany’s central bank spoke up for Helaba in its fight to avoid becoming the only stress test failure in Europe’s biggest economy.

“Helaba is in our view sufficiently capitalised even under the tough criteria of the European stress tests,” Bundesbank deputy Sabine Lautenschlaeger.

Many banks, regulators and politicians across Europe have criticised the stress tests, arguing that the EBA has changed the specifications of the test.