At 18.00 hrs today, the results of stress tests at 91 banks in 20 EU countries are to be announced to the public.
Bank resistance tests are fictitious scenarios to investigate the impact of changes in particular economic indicators on the stability of banks. For example, one calculates the impact of an economic recession on the stability of Europe’s banking system.
Much-anticipated results
Much speculation surrounds the publication of the results of the tests. This probably reflects the importance of the information contained in the results. The information might for example have implications for stock-exchange valuations of some banks.
Tests on a Europe-wide scale
Apart from the sensitivity of the results themsleves, we should emphasise the scope of the tests being published today. The execution and publication of the tests was decided and is being applied at European Union level in its entirety. The 91 banks subject to the tests together account for 65% of the EU’s banking sector.
It was the European Council (congress of European heads of state and EU governments) held on 17 June 2010 that decided to announce publicly the stress tests.
Previously, EU finance ministers, meeting at the Ecofin Council, had asked the Committee of European Banking Supervisors (CEBS) to co-ordinate the execution of the tests. The committee worked closely with the European Central Bank and the Commission.
The Committee of European Banking Supervisors (CEBS) is therefore making a public announcement of the results of the tests. The banks concerned and/or national bank supervisory authorities will also be publishing the results of the tests that concern them on their websites.