European Lenders to Face Tougher Stress Tests
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Regulators in Europe will begin using more stringent stress tests on 90 lenders after criticism the measures taken last year were not tough enough.
The banks being tested will be expected to pass a stress test with a passing grade of 5 percent of core Tier 1 capital. All banks which were included in last year's tests will be a part of the exams.
Ireland’s Irish Life and Permanent Plc, Norway’s DnB NOR Bank ASA, Nykredit Bank from Denmark, Slovenia’s Nova Kreditna Banka Maribor and Oesterreichische Volksbank AG from Austria will all be tested this year for the first time.
The European Banking Authority said, "a higher threshold than the legal minimum is necessary in assessing the resilience of banks in adverse circumstances if credibility and confidence in the banking sector is to be restored."
Banks will need to prove they can handle a 0.5 percent economic contraction in the euro area in 2011 and a 15 percent drop in European equity markets.
The banks being tested will be expected to pass a stress test with a passing grade of 5 percent of core Tier 1 capital. All banks which were included in last year's tests will be a part of the exams.
Ireland’s Irish Life and Permanent Plc, Norway’s DnB NOR Bank ASA, Nykredit Bank from Denmark, Slovenia’s Nova Kreditna Banka Maribor and Oesterreichische Volksbank AG from Austria will all be tested this year for the first time.
The European Banking Authority said, "a higher threshold than the legal minimum is necessary in assessing the resilience of banks in adverse circumstances if credibility and confidence in the banking sector is to be restored."
Banks will need to prove they can handle a 0.5 percent economic contraction in the euro area in 2011 and a 15 percent drop in European equity markets.
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