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CE promises harsher stress tests for banks until end of first semester

European authorities in the banking field will make a new round of stress tests for banks by June, more difficult than last year, the European commissioner for economic and monetary affairs Olli Rehn said, after a meeting of finance ministers in the euro area.

Many EU states resist proposals made to make tests and check banking systems in case of a cash crisis because they consider results would amplify problems European credit institutions have at present.

European authorities tested last year 91 Eu banks to evaluate their capacity to bear possible problems in real estate or commercial crediting.

Tests did not take in consideration risks of a bank being forced to give up business when they meet loan problems if clients withdraw their deposits. These kinds of problems placed in difficulty the Irish banking system and forced Dublin to ask for EU and IMF financial support. New stress tests should highlight weak points of the banking system and indicate those banks which need capital consolidation.

Test results will guide restructuring needed in the banking sector, Rehn said.

CE hopes that testing will prove investors, whose confidence was affected by hesitation of European leaders about the ways in which states with financing problems can be helped and that the EU financial system is a healthy one.Last year's tests were failed by seven banks, none from Ireland, which made critics said the exercise was irrelevant.

Sursa: http://www.actmedia.eu

Tags: tests banks problems banking european stress euro