More on Stress Tests

Press reports indicate that the Committee for European Bank Supervisors have revealed some details about the pending stress tests. A total of 91 banks in the EU will be tested. It appears the stress being tested for is two-fold: A 3-percentage point deviation of GDP for 2010 and 2011 from the EU's economic forecasts and a deterioration of sovereign risks beyond what was experienced in early May.

The banks being tested represent almost 2/3 of the EU banking sector and at least 50% of national banking sector in terms of assets. The German Landesbank sector and Spanish savings banks will be included. The results will be reported on both the aggregate level and on a bank-by-bank basis.

There has been little market impact from the news. The main consideration today is the elevated risk appetite of the rising equity market.
More on Stress Tests More on Stress Tests Reviewed by Marc Chandler on July 07, 2010 Rating: 5
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