FRANKFURT (MNI) – Planned stress tests for European banks will
cover their resistance to a crisis in the market for European sovereign
debt, but not the scenario of a default of a Eurozone state since the EU
would not allow such an occurrence, a German newspaper reported
Wednesday.
“In the planned stress tests, European banks will also be tested
for their resilience toward a crisis on the market for European
government bonds,” German weekly Die Zeit wrote without identifying its
sources.
“It is not envisioned, however, to test the consequences of an
insolvency of a Eurozone state,” the paper said. “The reason is that the
EU does not want to allow a sovereign default and has therefore
specifically set up a rescue fund,” the paper added.
The consequences of a downturn of economic activity on banks and
their lending will, however, be tested, the article said. Were a bank’s
percentage of own capital to fall below 6% in the tests, it would then
need to show how it would obtain fresh capital, the article said.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
[TOPICS: M$X$$$,M$G$$$,M$$CR$,MT$$$$,MGX$$$]
