Stress tests results: ATEBank, Hypo Real Estate, Unnim, Diada, Espiga, Banca Civica and Cajasur are loosers

Seven European banks have not passed the stress tests conducted to confirm the stability of the banking system of the EU

In brief: Goldman Sachs was right: stress tests have not been ATEBank, Hypo Real Estate, Unnim, Diada, Espiga, Banca Civica and Cajasur.

ATEBank, Germany’s Hypo Real Estate, as well as five Spanish banks: Unnim, Diada, Espiga, Banca Civica and Cajasur were unlucky today. In an attempt to calm the jitters among investors about the possible consequences of the influence of the debt crisis in the euro zone countries on the banking system in Europe, bank regulators have attempted to assess how well the 91 banks across Europe will be able to cope with the re-recession.

According to the results of testing revealed that in the event of adverse developments in the economy and the fall in the value of government bonds from seven banks capital adequacy ratio of Tier 1 falls below 6%. Stress tests have not passed the Greek ATEBank, Germany’s Hypo Real Estate, as well as five Spanish banks: Unnim, Diada, Espiga, Banca Civica and Cajasur. The only criterion by which European regulators determined, passed this or that bank stress test, just and became the bank’s ability to maintain capital adequacy level 1 level above 6% in the worst-case scenario in the economy. In total, these seven banks will need additional capital amounting to 3.5 billion euros to reach the level of transmission of stress tests. Stress tests were conducted on the assumption that the total losses of the banking system may be as high as 566 billion euros. Thus, the overall assessment of the banking sector in Europe has been positive, but many investors and analysts believe that the methodology for conducting stress tests was not sufficiently rigid, and therefore difficult to rely on the objectivity of the results.

Chief Economist, European Bank BNP Paribas Ken Vottret last week even said that stress tests of European banks is a gamble. Many experts fear that the test results will aggravate and confuse the situation. Stress tests of banks in the U.S. last year have helped to build confidence, even after 10 out of 19 banks failed to pass the tests and then started talking, it is necessary to raise capital by about $ 75 billion, Goldman Sachs predicted that 10 of the 91 bank, subjected to undergo stress tests fail. Poll Goldman Sachs, conducted among 376 respondents, including hedge funds and long-term investors, showed that European banks will need to draw 37.6 billion euros ($ 48.4 billion) in additional capital.

Ukrainian Globalist
2010-07-23 17:44, Economics.

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