Merkel says EU banking stress tests 'realistic'

21st July 2010, Comments 0 comments

German Chancellor Angela Merkel rejected on Wednesday criticism that "stress tests" being conducted on European banks were not stringent enough, saying they were "very realistic."

"The tests are being conducted in an environment where rescue packages are in place for Greece and the euro ... They cannot be conducted as if the rescue packages were not there," Merkel told reporters.

"I believe that (the banks) are being measured against the real situation, the conditions are very realistic for these stress tests."

The London-based Committee of European Banking Supervisors (CEBS) is due to release on Friday at 1600 GMT the results of tests on 91 European Union lenders accounting for 65 percent of the bloc's banking system.

The tests are designed to determine how well banks would cope with further shocks such as economic growth slowing sharply or a European country defaulting on its debt.

Similar tests in the United States helped soothe investor concerns about the state of the US banking system, but investors are worried that the European tests may not be tough enough.

© 2010 AFP

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