EU regulator says gathering 'updated data' on banking sector

11th October 2011, Comments 0 comments

The European Union's financial sector regulator on Tuesday said it was gathering "updated data" on the health of Europe's banks that focused on their capital and exposure to sovereign debt.

It follows intense media speculation over a fresh round of bank stress tests by the European Banking Authority just three months after the EBA gave a clean bill of health to Franco-Belgian lender Dexia, which was bailed out on Monday.

"The EBA, together with the national supervisors, is gathering updated data on banks' capital positions and on their sovereign exposures," a spokesman for the London-based regulator told AFP on Tuesday.

"This is in line with the recommendation issued by the EBA following the outcome of the 2011 EU-wide stress tests which called on supervisory authorities to request those banks with sizeable exposures to sovereign risk to take actions to strengthen their capital positions.

"The EBA will be assessing the actions taken and report on their actual implementation by mid next year," he added.

Dexia this week became the first lender needing a major bailout due to the eurozone debt crisis. It was rescued and dismantled by France, Belgium and Luxembourg after the cross-border lender ran into liquidity troubles and could not raise cash amid heightened concerns over its exposure to Greece.

Alongside Dexia's rescue, Europe's leaders are assembling a recapitalisation plan for all the region's banks.

The EBA had in July announced that eight European banks had flunked its "stress tests" that were designed to assess the ability of banks to withstand a worst-case economic scenario.

The regulator also judged that together they needed an injection of 2.5 billion euros ($3.5 billion) to meet new capital requirements.

Analysts and media have heavily criticised the tests for not including the possibility of a sovereign default in the eurozone -- particularly by cash-strapped Athens.

Five Spanish banks, two Greek and one Austrian bank failed to meet the regulator's new capital requirements, while another 16 financial institutions only narrowly passed.

A ninth bank, Germany's Helaba, said it had failed according to the EBA's standards but passed on its own calculation.

The EU's London-based financial watchdog had carried out assessments on 91 banks representing 65 percent of the sector.

© 2011 AFP

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