Thursday

28th Mar 2024

Fresh stress tests for EU banks

  • Previous tests failed to spot major problems in Irish banks (Photo: Matt Buck)

EU finance ministers have agreed the broad outlines of a fresh round of stress tests on major European financial institutions.

The reviews will be much more thorough-going than the stress tests of key banks last year, an exercise that at the time was cheered as robust by policymakers but yet failed to foresee any crisis in the Irish banking sector.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The latter development prompted the EU to undertake its second sovereign bail-out since the start of the eurozone debt crisis.

"We are going to draw the lessons by making the next tests more rigorous and even more credible," said internal market commissioner Michel Barnier on Tuesday (18 January) at the end of a two-day meeting between Europe's economy chiefs in Brussels.

The new stress tests will take into account underlying capital, liquidity and exposure to sovereign debt.

In July last year, the strength of the positions of some 91 institutions was tested against potential crisis situations, yet just seven were deemed to have failed the examination.

The methodology for the round, which will imagine even more severe crisis situation, notably in property markets, has yet to be agreed upon, but will be undertaken by the new European Banking Authority, with ministers expecting the tests to be completed by the end of May.

The level of disclosure once the results are concluded however remains a point of division amongst ministers.

The move came as Portugal, currently in the eurozone's sovereign-debt emergency room, saw increased pressure on its bond yields, with rates climbing on 10-year bonds to 6.951 percent, shy of the seven-percent level thought to be the tipping point for the country to request a bail-out.

Meanwhile on Tuesday, the Hungarian EU presidency enjoyed renewed opprobrium from other member states when the country's finance minister made the gaffe of publicly saying the eurozone debt crisis could last another ten years.

Mr Gyorgy Matolcsy made the comments during the public, televised portion of the meeting of EU finance ministers.

There is a likelihood "that the euro is endangered for another decade," he said.

IMF issues warning about European banks

IMF head Christine Lagarde has called into question the health of European banks amid a stark warning about a global economic slowdown.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us