EU starts new stress tests of banks

European financial regulators are embarking on a new stress test for European banks. Conducted a year ago, stress tests caused a strong criticism of experts, after fine stand the test of Irish banks last autumn surprise of many at a critical juncture. EU officials insist that this time the stress tests are much more stringent. As reported by the European Banking Management (EBA), stress tests will be conducted within a "few months". The statement reads, "tests will be conducted on the basis of basic and adverse scenarios. Unfavorable scenario will be developed by the ECB, it will be considered a significant deviation from the baseline forecast and country-specific potential shocks to housing prices, base interest rates and sovereign risks ". By the end of the week governance is banks details of both scenarios, followed by a period of discussion and amendment, and proposals from the banks. March 18 will publish a management scenarios for stress tests and a list of banks participating in the tests. Detailed methodology for stress testing are expected to be published in April. Final test results management expects to publish in June. President of the European banking management Andrea Enria assures that the current stress tests will be much tougher earlier, the results of which were published in July last year. Yesterday EBA spokesman reiterated that "the analysis will be more careful." Recall, last fall, the results of the European stress tests have been criticized: the moment due to a new escalation of the European debt crisis and the problems of the largest Irish banks EU has provided billions of dollars in financial aid to Ireland. Stress test results for 91 European bank were published in July 2010. During the test, for each bank was established model of its financial status for 2010-2011, based on the base and an unfavorable scenario. The baseline scenario is based on forecasts of the European Commission on the dynamics of GDP in EU countries, and an unfavorable scenario - GDP decline relative to the prediction of 3%. In addition, separately calculated the possible change of Tier I capital of banks in the event of a sovereign crisis, like the Greek. The criterion for passing the test - the value of the capital adequacy ratio of the first level no lower than 6% at worst-case scenario. Recent stress tests are not passed, only seven banks - five from Spain, one from Germany and one from Greece. Irish banks are Bank of Ireland and Allied Irish have shown during check positive results. The most intense interest of market participants is the methodology of the new stress tests. Earlier, the market held unofficial information that the new stress tests EU authorities are planning to add the criteria for adequacy of liquidity in major banks. The head of the Bundesbank, Axel Weber, in mid-February, expressed the view that the state of bank liquidity with the new stress tests really worth to pay attention, but this does not mean that the information will automatically be published. "I think that this information is very sensitive, so it must be handled very carefully, taking into account the specificities of each organization," - said in an interview with Market News International Weber. On the materials the Banki.ru