Details scant as stress test results loom
Details of Europe-wide testing of banks’ financial vulnerabilities are still being worked out as an end-of-July deadline to publish the stress test results for individual banks looms, the Bundesbank said yesterday.
Bundesbank vice president Franz-Christoph Zeitler said regulators were pushing ahead with plans for the tests, even as some reports claimed the German central bank and the country’s lenders opposed full disclosure of the results.
Banking supervisors have been conducting so-called stress tests to see how lenders would be affected by a sharp downturn in the economy or other shocks. Some banks fear a backlash if published results don’t match financial market expectations.
That concern was underscored yesterday amid fears the tests may force two to four German banks to seek help from the country’s bank rescue fund, Soffin.
Soffin has pumped billions into the country’s second-biggest lender Commerzbank, and even took over property lender Hypo Real Estate in the crisis. Germany’s Finance Ministry and Soffin both declined to comment yesterday.
Zeitler side-stepped questions on the need for aid and the degree to which the Bundesbank may back banks’ desire to control which results would be published.
“At the moment, there is no reason to make further statements related to individual institutions,” he said.
A European Central Bank tender yesterday eased some of the fears about Eurozone banks that have unnerved financial markets in recent months, suggesting they can cope with the repayment of almost half a trillion in emergency loans.
In the US, regulators have told top banks to raise $74.6bn to build a capital cushion officials hope will restore faith in financial firms and set a course out of the deepest recession in decades.
Germany’s biggest lender, Deutsche Bank, came through the financial crisis without having to ask for government aid but several of the eight state-backed landesbank lenders had to turn to their owners for extra backing after writing billions of euros off the value of their investments.