BRUSSELS (MNI) – European Central Bank Vice President Vitor
Constancio Friday rejected suggestions that stress tests of European
Union banks had not been stringent enough.
Earlier Friday, the Committee of European Banking Supervisors said
7 of 91 banks tested had failed the tests and needed a total of E3.5
billion in additional capital. Some market participants have criticised
the tests, saying they need to price in European sovereign debt
defaults.
The stress tests are “severe, rigorous and very comprehensive,”
Constancio told reporters at a press conference after the release of the
results.
“They show the resilience of the EU banking sector and the tests
themselves are a big contribution to financial stability in the EU,” he
added.
“We have not included a default of any country,” he admitted.
“We have not done that, because we don’t believe their will be a
default.”
But he said each of the 91 banks had revealed, during the course of
the exercise, its exposure to the sovereign debt of each EU country,
much more information than had been disclosed before.
“I think that the these stress tests are the more extensive and the
more severe that have been conducted in industrial countries,” he said.
And he pointed out that Europe’s tests come after some of the banks
tested had already increased their capital ratios, in response to the
economic crisis which began in 2008.
“Governments since 2008, have injected more than E200 billion (in
to the banking sector), so the test comes after that,” he said. It is
important, he said to take in to account “the starting points and what
has already been done,” before comparing to other stress tests.
“The starting point was not the starting point that has been
characterised by many commentators,” he said, “if you want to criticise
the tests, you must criticise the assumptions, not the results,” the
Vice President said.
–Brussels: 0032 487 (0) 32 803 665; email: echarlton@marketnews.com;
william.wilkes@ntkn.com
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