Repeat:ECB’s Noyer:Banks Can Withstand Worst Re Greece
–Retransmitting Story Published 23:36 ET Thursday
–No Need For Another Stress Test For European Banks
By Yali N’Diaye
WASHINGTON (MNI) – European Central Bank Governing Council member
Christian Noyer said Thursday that while the worst outcome is unlikely
for Greece given Europeans’ efforts avoid it, European banks could
withstand writing down 100% of their debt exposure.
Asked during a joint press conference with French Finance Minister
Francois Baroin following a working dinner of G20 finance ministers
whether more stress tests were needed given the worsened economic and
financial environment since the last tests were performed, Noyer said
there was no need for more.
“I don’t think there is any need for another stress test,” Noyer
said, pointing out that the tests that were performed last summer were
“rigorous with very tough economic scenarios.”
“Everyone recognizes that,” he said.
The issue, Noyer continued, not just for French banks but also for
European banks, is the sovereign risk, and Greece in particular.
And on that front, Noyer tried to reassure nervous markets that
European banks could withstand writing off even the totality of the
Greek exposure, a scenario he deemed “unlikely.”
Referring to the worst case scenario, Noyer said, “I do not
believe, we do not believe that is at all the likely outcome” given
efforts by Europeans to avoid it and to allow Greece to come back on a
sustainable path through the implementation of the troika program.
“Even in the worst case,” Noyer said, with banks forced to write
down 100% of the Greek exposure, for instance, “it’s something we can
“It would be absorbed in less than one quarter of profits.”
In fact, “It could have been done in the second quarter.”
That said, he urged European banks to improve their communication
towards the markets.
“We have asked the banks to clearly explain to the markets
themselves,” he said, given the focus on Greece.
“We certainly encourage them to have a very clear communication to
reflect on how to present their financial results for the next quarter.”
** Market News International Washington Bureau: 202-371-2121 **