Stress Test 2011 initial results
The Stress Test results are out! It looks like 8 have been judged to have failed but interestingly 16 came close to failing. Given how lenient the adverse scenario is (especially given recent market turbulence relating to Spain and Italy) that is fairly surprising. See below for the table on how each country's banks fared...
We have to say that we're surprised more didn't fail... OK, well we would be if the tests were more credible, but you get where we're coming from.
The banks that failed are below (some with their capital shortfalls) courtesy of FT Alphaville:
Austria
Volksbanken
Greece
Atebank
Eurobank EFG (€58m)
Spain
CAM (€947m)
Catalunya Caixa (€75m)
Unnim (€86m)
Banco Pastor
Caja 3 (€140m)
Labels: banking sector, EBA, eu, eurozone, stress tests
The biggest and most imminent threat to European Banks is the value of sovereign bonds that they hold at par, but are actually trading at considerably lower prices; some of these may already be worth 30%.To think that an organisation can 'stress test' these banks while eliminating sovereign debt risk makes a mockery of the tests and the organisation behind them. The result is obvious: tumbling bonds and surging yields on all preihpery debt.