Bar to be raised for EU bank stress test

Article reports that European banking regulators were preparing to introduce a 'near fail' category into the new stress test process, March 2011, as part of a mechanism to force recapitalisations on weaker banks.

The European bank stress tests of 2010 saw all but seven of the 91 banks in the exercise pass a 6% tier one capital threshold, a measure of financial strength.

The head of the German economic Ifo think-tank Hans-Werner Sinn (and others) said the EU's new banking stress tests were too lax. He argued the new tests were no better than the 2010 widely criticized ones.

Deutsche Welle, 6.3.11: EU's new bank stress tests too lax, says think-tank chief http://www.dw-world.de/dw/article/0,,14892853,00.html

ESO: Background information: Website: European Banking Authority http://www.europeansources.info/record/website-european-banking-authority-eba/

Frankfurter Allgemeine Sonntagszeitung, 7.3.11:Banks? What banks? (via PressEurop) http://www.presseurop.eu/en/content/article/532871-banks-what-banks

ESO: Background information: European banks braced for new stress tests http://www.europeansources.info/record/european-banks-braced-for-new-stress-tests/

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