July 23, 2010
This story about bank stress tests was published on 23rd July 2010 by EurActiv.
Finance officials from the 27 member states held very low-key talks in Brussels yesterday (22 July) in an attempt to co-ordinate governments’ reactions to the results of bank stress tests on the sector’s resilience to another economic downturn and sovereign debt crisis.
The results will likely reveal liquidity problems in German, Italian, Greek and Spanish banks, according to early predictions made within the sector. The Committee of European Banking Supervisors (CEBS) has said it will publish the results of the tests, carried out by national supervisors, at 6pm today, after European markets have closed.
Officials were reluctant to reveal details of how governments plan to react to the results. Ministry officials made a last-minute decision to publish the test’s methodologies a few hours ahead of the actual results, EU sources said.
This may prove an important step as the tests’ methodologies have been heavily criticised for not using the bleakest possible scenarios, like a Greek default or windfall prices in the Spanish real estate market (EurActiv 02/07/10).
“Everybody is talking to everybody on how to react to what CEBS will say tomorrow,” an EU source said on the eve of the results, refusing to divulge any more information on the content of the talks.
Governments were under pressure yesterday after the International Monetary Fund called for further transparency in the tests and for them to be extended to banks beyond the 91 already included.
During yesterday’s teleconference, the ministers allegedly also discussed whether they would ask banks to provide a detailed breakdown of their sovereign debt holdings, the show of transparency that investors and the IMF have been calling for.
EU diplomats say governments will be compelled to react if the results show weaknesses in their banks.
“If the results are bad, it is unthinkable that the governments concerned will say nothing,” a diplomat said, adding that “it is the credibility of the EU which is at stake”.
The diplomat also underlined that stress tests were chiefly a communication tool.
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