Eight European banks buckle under stress test

15th July 2011, Comments 0 comments

Eight European banks have failed to withstand a battery of tests designed to gauge their chance of survival in tough economic times. The European Bank Authority EBA announced the results of the stress test on Friday. It looked at how the banks would fare if the economy were to falter, if customers were to withdraw their savings or if the value of property holdings were to plummet.

A total of 90 European banks took part in the stress test, which showed that five Spanish, two Greek and one Austrian bank would not survive under such harsh conditions. They will now be given six months to amass new reserves. The eight ailing banks are relatively small. All of the major European banks, including the Big Four in the Netherlands, passed the test.   Of the four major Dutch banks to undergo the stress test, Rabobank emerged with the best results. Of the other three – ABN AMRO, ING and SNS – the SNS Bank proved to be the weakest but still came out on the right side of the threshold.   Tougher checks Dutch Finance Minister Jan Kees de Jager says he is pleased with the Dutch banks’ results in the European stress test. “All of the Dutch banks passed the test again. That’s good news, because the stress test has been improved and the checks are tougher than they were last year. Another important aspect is that many more details about the position of the individual banks have become clearer. That makes the banking sector more transparent for investors.”   Process of repair In a joint statement EU Internal Market Commissioner Michel Barnier and Economic and Monetary Affairs Commissioner Olli Rehn said they welcomed the publication of the results of the EU wide stress test as another step in the process of repair in response to the current crisis. They concluded “Today's results highlight that the great majority of European banks are now much stronger and better able to resist shocks.” They called on banks that did not meet the threshold or that demonstrated substantial weaknesses to take all the necessary steps to reinforce their capital positions.     © Radio Netherlands Worldwide


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