German banks did not reveal full debt details: report

26th July 2010, Comments 0 comments

European banking regulators say six German banks did not reveal full details of sovereign debt holdings as part of a key test of the sector's health, the Financial Times reported on Monday.

"We agreed with all supervisory authorities and with the banks in the exercise that there would be a bank-by-bank disclosure of sovereign risks," the FT quoted Arnoud Vossen, secretary general of the Committee of European Banking Supervisors (CEBS), as saying.

The six German banks included the biggest, Deutsche Bank, as well as Deutsche Postbank, which has the nation's largest retail network, and Hypo Real Estate, which failed the so-called "stress tests," the newspaper said.

The other German banks which did not disclose all the details on holdings of public debt were identified as the mutual banks DZ and WGZ and the regional state-owned lender Landesbank Berlin.

On Friday, CEBS released findings on 91 European banks which were checked to see if they had enough core capital to withstand another economic recession coupled with steep losses on loans, including sovereign debt.

Financial markets are concerned that a default by a eurozone country such as Greece could cause some banks to collapse, and the stress tests were aimed at showing where each stood to restore confidence and boost interbank lending.

Analysts are likely to assume that a refusal to make a full disclosure means the German banks have something to hide.

The German financial market regulator Bafin and central bank have said German law prevents them from forcing banks to release such details, though Postbank did provide some more information on Sunday, the report said.

Vossen did not say why the German banks had not provided full disclosure but told the FT he would be getting in touch with German authorities.

On Sunday, the European Commission reportedly "encouraged the few banks who had not disclosed the information to do so."

© 2010 AFP

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