PARIS (MNI) – The results of European bank stress tests should be
fully disclosed to the public, ECB Governing Council member Christian
Noyer said Thursday.

“I remain favorable to publishing the stress tests of European
banks both by country and by bank,” Noyer said in a brief statement
prepared for reporters. In stating his view, Noyer is in synch with
French Finance Minister Christine Lagarde, who also favors publication
of the results.

The question of whether to publish stress test details, and exactly
how much to publish, is proving to be a divisive issue among Eurozone
countries. As Market News International reported on Wednesday, France
favors publication while Germany opposes it.

That is likely to lead to some compromise in which some details,
but not all, are released publicly — which may not satisfy markets
enough to allow confidence to return to the interbank market.

European finance ministers are expected to decide on the issue at
the end of the month.

Those who favor full disclosure say it is necessary to ease
suspicion among banks that has led to a recent tightening of interbank
lending and cause many banks with surplus liquidity to deposit it at the
ECB rather than lend it to other institutions.

But those who argue against it say it could have the opposite
effect by revealing large problems that could spook markets or, worse,
require yet more public funds to shore up banks that are shown to be in
worse-than-expected shape.

Spain said Wednesday that it would publish details of the stress
tests it is conducting. Greece is also gearing up to conduct rigorous
stress tests as required by the E110 billion aid package it agreed with
the Eurozone and the IMF.

Though France favors publication of stress test results, it has not
said it would publish the details of French banks unilaterally. An
official in French Finance Minister Christine Lagarde’s circle told MNI
recently that Lagarde hopes to forge a common European approach.

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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