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Dublin: 11°C Wednesday 21 October 2020

Bank stress test results due today

The results of this fourth test will show which banks have enough capital to withstand a prolonged recession.

AIB passed the last stress test but then ended up being bailed out
AIB passed the last stress test but then ended up being bailed out
Image: Julien Behal/PA Wire/Press Association Images

THE RESULTS OF the ‘stress tests’ on European banks are due at 5pm today.

It is expected that 10 of the 91 banks tested have insufficient capital to withstand a long recession, Reuters reports, including Germany, Portugal, Spain and Greece.

The European Banking Authority (EBA) will make the announcement.

Banks that fail the test must have plans by September this year to make up the shortfalls.

The Financial Times reports that the results could lead to distressed debt deas.

This is the third test of lenders in Europe in four years.

German bank Helaba dropped out of the stress test yesterday as it disagrees with the EBA’s approach to what capital is admissible.

Meanwhile two Spanish banks are expected to fail and blame the regulator for being too strict.

However BBC news points out that seven banks failed last year, leading to the EBA to make changes to the stress tests to make them tougher.

Here in Ireland, although Bank of Ireland and Allied Irish Bank passed the stress test last year, AIB later needed to be bailed out by the government.

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