–Adds Detail on HRE, Future Stress Tests To Story Sent At 16:30 GMT
FRANKFURT (MNI) – Rejecting criticism that European Union
harmonized stress tests lacked appropriate vigor, two of Germany’s top
financial market officials assured Friday that the tests were rigorous
and can be trusted.
Bundesbank Vice President Franz-Christian Zeitler said that the
tests should bolster confidence in the markets, but would not say
exactly how he would interpret a positive reaction once the markets
digested the information over the weekend.
“I am convinced that this stress tests is confidence-building that
it has a large degree of transparency that we did not have in the past,”
he said.
“This stress tests has all the necessary ingredients to enhance
confidence. I don’t have my crystal ball with me, so I cannot tell you
what the market reaction will be,” Sanio said.
Sanio sharply refuted those who criticized the stress tests
methodology before publication, saying that those who did so were
probably motivated by material interests.
The press conference explained the results of the tests and their
consequences for German banks. As expected, all 14 German banks tested
except the embattled Hypo Real Estate Holding (HRE) passed the tests,
meaning that their Tier 1 capital ratio stayed above 6% even in the most
severe stress scenario.
Sanio said that with the exception of HRE, the German banks tested
did not need additional capital restocking.
Sanio made it clear that the point of the tests was to calm markets
that have been in a highly nervous state since early May. Zeitler
confirmed, “This mission has been filled.”
Pressed as to whether the stress test should be carried out more
often than just this one time, both Sanio and Zeitler concurred that the
current stress tests were carried out in an extraordinary situation,
suggesting that they should not be needed again any time soon.
Only time and market reaction will tell for sure.
–Frankfurt bureau; +49-69-720-142; frankfurt@marketnews.com
[TOPICS: MT$$$$,M$X$$$,M$G$$$,M$$CR$,MGX$$$,M$$EC$]
