Seven out of 91 banks fail stress tests
European Union regulators said most euro zone banks passed their stress tests, though analysts worried whether the tests were strict enough to reveal the true health of the banking sector.
All French banks and all but one of Germany’s were judged to have sufficient capital cushions to withstand potential losses on their sovereign debt holdings.
A handful of the 91 banks examined failed the tests, including ones in Greece and Spain, but analysts said those results were expected.
Those which failed include Spanish banks Diada, Espiga, Bianca Civica, Unnim and Cajasur. The other two were Hypo Real Estate and Greece’s ATEBank.
The euro initially rose above $1.29, briefly erasing its losses on the day. But it resumed its decline as results trickled in and was last trading at $1.2860, down about 0.2 per cent.
“There’s no major surprise so far in the results of the tests. Most of the institutions that failed, were expected to do so,” said Vassili Serebriakov, strategist at Wells Fargo in New York.
“Details of the tests still need to be scrutinized but the issue remains whether the tests were too soft on European banks. But it is too soon to determine that at this point. Still, there’s nothing in these reports that is a true positive for the euro.”