EU bank stress tests “will be tougher than last time”

15th July 2011

The tests are designed as a financial healthcheck and aim to ensure banks have sufficient capital to withstand difficult economic scenarios.

Some say the tests are not strict enough, despite changes made after only seven out of 91 banks failed last year, says the report.

The EBA has said that this year's tests would be tougher than the first round.

However, Harry Wilson on a Daily Telegraph blog says: "The tests give the market the chance to kick the tyres of some of Europe's weaker financial institutions, so you might expect the City to be enthusiastic about them. However, the general sense among many analysts is that this is a case of "too little, too late".

"[The] stress tests are considering neither funding nor liquidity, and therefore cannot offer useful conclusions on the eurozone banking system's robustness," said UBS analysts in the Daily Telegraph.

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