Banks in the eurozone are rushing to ensure they have sufficient funds to pass the next round of stress tests.
The tests set out by the European Central Bank are designed to test the ability of each bank to withstand a financial shock. This round will be the biggest review of the financial wherewithal of eurozone banks ever made.
There is speculation, however, that some will fail the stress tests, including Portugal’s BCP and Germany’s Commerzbank.
According to research by City law firm Linklaters, euro area banks have had to raise 32% more capital this year than they did in the year before the last stress tests in early 2011.
The total amount they needed to find was reported to be €35bn.
Banks in Italy and in Greece managed to raise the most this year. The combined total of €18.8bn is more than half of the €35bn.
Despite their efforts, three banks in Italy and another three in Greece are seen as unlikely to pass the tests.
Those who fail will have two weeks to submit new capital plans, and some may be forced to raise more cash or consolidate.
Test results will be announced at the end of October.
Comments
So allowing any kind of lying and cheating in a bizarre reversal of the concept of 'honour'
These bank stress tests only make sense if north european regulators are testing south european banks and vice versa.
The cultures are so different - a Ricardo Salgardo / BES type situation would have leaked out decades ago.
Remember that Bankia (and presumably all Latino banks that own or control estate agents) ... did not have to value - in a falling market - their bad or going bad property at the old market valuation.
So distorting the banks worth by 40%.