European bank stress tests will start next month
The European banking authority (EBA) in 29 announced this year's European bank stress tests. The stress test will start in May, 124 the eu's major Banks, these Banks assets account for more than 50% of all the eu Banks. Test results will be announced in October.
EBA pressure test scenarios include: the assumption of the European economy in last two years of recession, the economy shrank by 0.7% this year, shrink by 1.5% next year, to 2016 can regain the weak growth. The unemployment rate hit a record 13% by 2016; Housing and stock market crash; The government and corporate debt interest rates rise, etc. In addition, Banks need to simulate the dotcom bubble burst in 2000 and the collapse of lehman brothers after the stock market disruption caused by the global credit crunch. Pressure test will test whether Banks have enough capital to cope with the situation, can pass the test of Banks need to maintain at least common tier 1 capital ratio above 5.5%.
Araya, the EBA, said the regulator pressure test will be able to understand the eu banking fragility.
Benin tilburg economic management institute of the banking industry experts said, the uncertainty of the future makes Banks to raise more capital is critical, "because it is difficult to determine what is the cause of the next round of crisis, so fully prepared to become even more important".
