ECONOMY

Speculation mounts ahead of stress test result issue

A group of 25 banks have failed European health checks, while up to 10 of those continue to have a capital shortfall, two people familiar with the matter said on Friday, providing a snapshot of the health of the region’s lenders.

The health checks, led by the European Central Bank, found that banks in countries including Greece, Cyprus, Slovenia and Portugal had fallen short of a minimum capital benchmark at the end of last year and that up to 10 remained in difficulty now, the sources said.

Banks in Spain and France had fared, by and large, better than expected.

The result, which has yet to be finalized by the ECB’s governing council on Saturday, provides the most complete picture yet of the robustness of the eurozone’s top 130 lenders.

Those banks with shortfalls will now have two weeks to submit a plan to bolster their capital to the European Central Bank, which will decide whether or not it gets the green light.

A spokesman for the ECB said the test results had not yet been finalized, describing reports in the meantime as speculative.

“The results will not be final until they are considered by the Governing Council of the European Central Bank on Sunday 26 October, after which they will be published,” he said.

European banking shares dipped briefly on Friday after Bloomberg News reported that 25 banks within the eurozone would fail the ECB “stress test.”

[Reuters]