New European bank stress tests planned for 2011: commission

25th November 2010, Comments 0 comments

A new round of stress tests on the financial health of European banks planned for 2011 will rely on more stringent criteria than tests administered in July, an EU finance official said Thursday.

"We will have to do the stress tests again," Jonathan Faull, head of the internal market and services unit of the European Union's executive commission, said in talks here with the French market regulator AMF.

"You can expect truly demanding tests," he said, adding that they would take place "over the course of 2011".

The tests are designed to determine the financial capacity of banks to withstand economic crises of varying degrees of severity.

But Faull denied that the new round of tests was linked to the current banking crisis in Ireland.

Speaking in Brussels Thursday a spokesman for EU Internal Markets Commissioner Michel Barnier told journalists that "we have always said we hoped there would now be more regular stress tests".

"Therefore we plan to have them on an annual basis."

Of 91 European banks tested in July, only seven -- five in Spain, one in Germany and one in Greece -- were found to be vulnerable to economic stress.

Questions about the effectiveness of the exercise in July have been raised in response to the bank-based financial crisis in Ireland, which has prompted the government there to seek a huge bailout from the European Union and the International Monetary Fund.

Two currently troubled Irish banks, Allied Irish Banks and Bank of Ireland, passed the tests in July.

© 2010 AFP

0 Comments To This Article