Sources familiar with the discussions said Germany fought hard behind closed doors to limit the extent of disclosure.Įven so, investors now have more detail on banks’ holdings of sovereign debt than they had before.
“Sovereign debt problems remain, funding constraints for their banks are still there and these have the potential to weigh on the euro.” “You have to take these tests with a pinch of salt,” said Jonathan Cavenagh, currency strategist at Westpac, Sydney. Shares in Deutsche Bank, which also owns just under 30 percent of Postbank, were down 1.4 percent, the weakest of the top names. German banks, including Deutsche Bank, were criticised for not providing as much information as rivals about their exposure to sovereign debt in the euro zone - the major worry that prompted the tests. The sums of money involved are really relatively small,” Henderson said. “Those that are at the margin may as well raise equity to dampen down fears. With so few banks failing, attention was on 17 who only scraped a pass, some of whom may opt to raise cash if the test fails to reduce their funding costs or soothe worries about risks, analysts said. “We’ve already recapitalised most of the European banks anyway with huge amounts of money. However, “most people are going to be absolutely fine,” said Ian Henderson, who runs a global financials fund for JP Morgan. The euro was little changed in the absence of any real shocks in the test of whether 91 banks in 20 countries could withstand another recession in the next two years.Ĭritics said the test was too soft - shown by the banks that failed needing just 3.5 billion euros ($4.5 billion). Problems among the cajas have long been flagged, however, and are being remedied, and Europe’s banking index rose 0.4 percent in a flat wider stock market by 1015 GMT. Spain’s smaller regional lenders, or cajas, will start a roadshow in London on Monday aimed at reassuring investors after the test results on Friday showed five of their peers among the seven banks that failed, and several more close to failing.
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