Brussels, 13/07/2010 (Agence Europe) - EU economy and finance ministers found common ground in Brussels on Tuesday 13 July concerning the arrangements for the publication, on 23 July, of stress tests currently conducted on 91 main European banks. The exercise is to show the resistance of banking establishments under extreme conditions, such as the depreciation of debt securities held by them. Also, all countries are ready to take the measures needed to consolidate the situation of a financial institution in need. The Economic and Financial Committee (EFC) of the EU was entrusted with the task of follow-up after publication of the results of stress tests.
Didier Reynders, Belgian Finance Minister and President-in-Office of the Ecofin Council, explained that the results of the tests would be published in a coordinated manner throughout the EU. Banks will publish the results and, of course, results will then be taken up by the various national oversight bodies. The Committee of European Banking Supervisors (CEBS) will organise coordination and publication. The consolidated results of the stress tests for banks will be published. Then, there may be an (optional) publication breaking down results, especially in the countries that host a number of institutions that make up a group, Reynders said. The maximum time limit for giving such information is two weeks. This was a request made by quite a few member states that host establishments that are branches of a parent company established in another European country.
The aim is to publish results in the most transparent way possible by bringing to light the situation of different institutions with regard to sovereign debts, the president-in-office of the Council said. The objective is to have a presentation that gives the largest guarantees of credibility to all institutions, he added.
The countries have undertaken to take the necessary measures, if needs be, in order to consolidate the situation of a number of institutions still further, especially in terms of capital, Reynders said.
Stress tests are essential for restoring confidence in the European economy, it was underlined by Olli Rehn, European Commissioner for Economic and Monetary Affairs. “In my view, the European banking sector is resisting pretty well. However, at the same time, when we publish the results of the stress tests, it will be necessary to steel ourselves for finding a few pockets of vulnerability”, he said on Monday 12 July after the Eurogroup meeting. The Commission is ready to grant the necessary derogations to Community rules on state aid, should this prove necessary in the wake of crisis scenarios, Rehn said.
Last year, tests were only carried out on 22 institutions, and only general tendencies had been made public. Europeans have this time decided to reveal the results of the banks, as markets are concerned about the health of some of them, in particular Spain, which is facing a serious budgetary crisis. They also wish to ensure that they will not leave to one side the banks that could “pass” the tests successfully. Guy Verhofstadt, who heads the Liberals at the European Parliament, called on the European Union, on Monday, to stand ready for banking recapitalisation. (L.C./transl.jl)