Danilo Pereira fires Al Ittihad into King's Cup final with dramatic stoppage-time double    Visitors welcomed with Eid initiative at Thee Ain Heritage Village in Al-Baha    Over 1 million pilgrims benefit from golf cart service at Grand Mosque during Ramadan    Saudi Arabia considers rent cap as part of major real estate reforms    Tebuk emir reviews rain response in Tayma    Messi's bodyguard banned from touchline at Inter Miami games    Screen time in bed linked to insomnia, study finds    Death toll from Myanmar earthquake rises to 2,719 as rescue efforts continue    Russia, Ukraine trade blame over new energy strikes    Putin orders Russia's largest military call-up in over a decade    Le Pen vows to appeal political ban, calls verdict a 'denial of democracy'    Haramain High-Speed Railway transports over 1.2 million passengers during Ramadan    Albania hosts MWL chief for Eid sermon at largest mosque in the Balkans    Ministry of Education forms 425 community partnerships with SR653 million impact    Saudi Transport Authority says passengers can ride for free if taxi meters are off    Mexico bans junk food in schools to fight childhood obesity epidemic    Sweet sales surge ahead of Eid as Saudi chocolate imports top 123 million kg in 2024    Saudi creatives shine at Jeddah's Fawanees Nights with art, fashion, and storytelling    T1 CEO confirms Gumayusi's return for LCK Spring after lineup shakeup    100 Thieves claim Marvel Rivals Invitational NA crown as 2025 scene heats up    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    King Salman prays for peace and stability for Palestinians in Ramadan message King reaffirms Saudi Arabia's commitment to serving the Two Holy Mosques and pilgrims    Bollywood star Saif Ali Khan 'out of danger' after attack at home in Mumbai    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Seven EU banks fail stress tests
Published in The Saudi Gazette on 24 - 07 - 2010

All but 7 of 91 European banks passed the much-anticipated “stress tests” aimed at showing Europe's banking system is sound enough to weather the continent's debt crisis - an outcome that officials hoped would forestall further market turmoil.
It had been thought that some banks needed to fail for the exercise to be accepted as credible, and some analysts still argued that the results showed the tests weren't rigorous enough - the euro was trading flat on the day after the release of the results at just below $1.29.
If stock and bond markets take the view that the tests were not tough enough when European trading resumes Monday, then the exercise could make matters worse - and further expose the EU to charges that it has failed to rise to the debt crisis within its borders.
“The stress tests do not seem that stressful and it is looking more like a political whitewash rather than a genuine attempt to reassure financial markets that euro zone banks have balance sheets that could really withstand sovereign risk shocks,” said Neil MacKinnon, global macro strategist at VTB Capital.
“They are delaying the day of reckoning,” said MacKinnon.
Policymakers in Europe hope the results will reassure markets worried about hidden bank losses from the crisis.
They were quick to laud the results as a resounding vote of confidence in Europe's banking system.
The European Union said the results “confirm the overall resilience” of the continent's banking system.
Christine Lagarde, France's finance minister, said the tests were “tough” and “very comprehensive and as a result I would suggest that those results should be very credible and should raise the confidence in European banks.” The Committee of European Banking Supervisors, the little-known regulator charged with conducting the stress tests, said the seven banks would see their capital positions fall too low for them to weather a steep fall in the price of government bonds many of them hold, a worst-case scenario dubbed “sovereign shock” still stopped short of an outright debt default by an EU government. That may make the tests less convincing to some, since many analysts still predict Greece will eventually have to restructure its debt - a polite word for default, under which creditors are paid over a longer period of time.
Germany's already-nationalized lender Hypo Real Estate Holding AG failed the strength test, but that had been widely expected. So far, the bank, which does not expect to return to profit before 2012, has received capital injections worth ¤7.7 billion ($10 billion) from the German government's bank rescue fund and loan guarantees of more than ¤100 billion.
There had been speculation in the run-up to the publication of the results that some of Germany's regional banks - the landesbanken - would fail to clear any stringent hurdles.
As it was, only NordLB came close to joining Hypo but barely scraped by.
As expected, Spain notched up the most casualties, with five of its small savings banks - the so-called cajas - deemed as having insufficient capital to deal with future adverse shocks following the collapse of the country's property boom. The five Spanish banks - none of them listed on stock markets - were Diada, Unnim, Espiga, Banca Civica, and Cajasur, which was bailed out by the Bank of Spain in May.
Greece's ATE bank failed and confirmed it would go ahead and proceed with a capital increase, which will involve the highly-indebted Greek government itself, the main shareholder.
In total the seven banks have to raise ¤3.5 billion to shore up their finances, CEBS said.
That's far lower than some analysts had been predicting.
But the supervisors said Europe's banks have, over the past couple of years, gone a long way to shoring up their balance sheets.
Anxiety about Europe's banks mounted in tandem with the government debt crisis, which eventually led to ¤110 billion ($142 billion) international bailout of Greece and a $1 trillion backstop for other troubled governments if they need it.
The worry was the banks were holding government bonds from the likes of Greece, especially as their finances had already been battered by the recession. Banks became more reluctant to lend to each other and many of Europe's banks became more dependent on emergency funds from the European Central Bank for much of their day to day needs.
“It seems the tests may have raised more questions than they have answered and in the coming weeks it will be the interbank lending markets that will have the real answer as to whether real confidence has returned to the European banks,” said Mark O'Sullivan, director of dealing at Currencies Direct.


Clic here to read the story from its source.