ECB may ease back on stringent stress test requirement


Good news could be in store for European banks as chatter says the ECB is considering just a 6% capital requirement in its stress tests as opposed to the 8% previously promised. A small number of countries aren't even satisfied with 6% and reportedly may press for a lower number.

Previous European bank stress tests are known mostly for giving passing grades to lenders who just a short while later required government bailouts.

Tails in the air today include: Santander (SAN +1.6%), Deutsche Bank (DB +2%), ING (ING +0.9%), BBVA (BBVA +3.4%), Bank of Ireland (IRE -0.6%), and Allied Irish Banks (AIBYY +6.3%).

Related ETF: EUFN

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Comments (2)
  • wyostocks
    , contributor
    Comments (9111) | Send Message
     
    Another admission that the health of the banks sucks.
    Of course having said that the banks cannot pass the 8% test, the stocks rally.
    Bubble? Naaaaaaaah.
    15 Jan 2014, 12:09 PM Reply Like
  • gmmpa
    , contributor
    Comments (650) | Send Message
     
    I am not convinced that capital requirement is the measure of banking health. It is more a metric for throttling down banking activity and growth. In America the Fed is doing the same thing but also printing money to inflate the American bank balance sheets. Europe is probably doing the same. This is why Goldman Sachs is considering going private to get around the restrictions. The root cause of banking system problems is not the banks. What is causing the bubbles is socialism governments and their incessant need to redistribute other people's wealth. It is the central governments that need the constrains not the banks. Economies cannot do without the financial system. Who is watching the governments and their central banks?
    15 Jan 2014, 02:22 PM Reply Like
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