BRUSSELS (MNI) – EU bank stress test results will be released in
two stages, beginning on July 23, Belgian Finance Minister Didier
Reynders – whose country currently holds the EU’s rotating presidency –
said on Tuesday.

The aggregate results of stress tests of 91 EU banks and the
overall data will be released on July 23, two weeks later individual
national regulators will release, if necessary, “disaggregated” data, EU
diplomats said, which will include the stress test results for the
branches and subsidiaries of the larger institutions.

Reynders didn’t say why the finance ministers had decided to
release the data this way, but said that they were committed to full
transparency.

European Commissioner for Economic and Monetary Affairs, Olli Rehn
said that the preferred way for banks that failed the stress test to
raise more capital would be via the markets.

“If that is not possible for some reason then the next line of
defence would be the national financial backstops,” he said.

“If there were to be say excessive programmes which could not be
covered by either market financing or national backstops then we would
have a third line of defence which would be the EU (facilities),” he
said, indicating that as a last resort, he thought it was possible for
banks to tap the E440 billion stability fund set up by Eurozone
governments to provide loans to countries in sovereign debt trouble.

Use of the stability fund for this purpose is a contentious issue
among policy makers, with French Finance Minister Christine Lagarde
saying she doesn’t think it is possible to use the fund.

“The framework of the EFSF is designed for situations where
countries are in difficulty,” Lagarde told reporters late Monday.

UK Chancellor of the Exchequer, George Osborne told reporters that
EU bank stress testing “needs to be seen as credible, the market needs
to feel, the public needs to feel, that… there’s been an appropriate
stress tested,” he said.

He then added: “EU member states must have plans in place” to
backstop banks if necessary.

“We need to be able to stand behind them,” he said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]