Will Dutch banks pass EU stress test?

15th July 2011, Comments 0 comments

The results of the stress tests conducted at 90 major European banks will be announced later on Friday. Last year’s tests proved a dismal failure: most banks passed the test, even those that had to be bailed out only a few months later. So are these tests to be taken seriously? And how are the Dutch banks doing?

The European Union has ordered the banks to chart how much money they could lose on Greek and other state bonds without falling over. The participating banks are tested for a series of contingencies. The EU has admitted that last year’s stress tests were slightly less than successful and has introduced much stricter requirements.

There is good reason to take the stress test seriously as the effects of the financial crisis are still being felt. And, more importantly, Europe is now facing a new crisis: the debt crisis which started in Greece and might well spread to other southern EU member states.

So how about those Dutch banks? Finance Minister Jan Kees de Jager is fully confident they will do well in the test. ING, ABN-Amro, SNS Bank and Rabobank took part. The German and Italian banks are also expected to pass the test. However, analysts expect about 10 to 15 banks will fail to make the grade. A number of Spanish financial institutions are said to be preparing for the worst...

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