July 15, 2011
About two dozen European banks were put under official pressure Friday to bolster their reserves, as the results of financial stress tests created more skepticism over the region’s will to deal with its festering financial crisis.
The high pass rate under the exams did not satisfy analysts’ hopes for a bolder accounting that would help restore confidence in the health of the European Union financial system and remove doubt about the effects of a default by Greece on its government debt.
After a vast data-crunching exercise by regulators, only eight of 90 banks were deemed too weak to survive economic shocks like a further deterioration in the sovereign debt crisis.
A ninth bank, Helaba of Germany, would have failed, but refused to disclose its data. An additional 16 passed narrowly, and will be asked to take steps to “promptly” increase their resilience, by raising more capital for example, the regulators said.
“The publication of these results will not assuage investors’ fears over the resilience of the E.U. banking sector,” Marie Diron, an economist who advises the consulting firm Ernst & Young, wrote in a note.
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