EU banks have spent €104bn on tuning-up for stress tests


As everyone wants the stress tests to run like clockwork, European authorities, and especially German, urge the financial industry not to leave any loopholes for the last minute.

Axel Weber, president of Swiss UBS and former Bundesbank’s said in Wien on Monday that entities should reinforce their capital before the results of these tests are revealed, better than afterwards, when the financing is likely to become more complex and expensive.

Furthermore, BaFin Germany’s financial regulator’s president Elke Koenig warned those EU banks that could have capital needs to continue the process of raising money as long as conditions are favourable. He also considered that some German entities may find difficulties to approve the stress tests.

Koening could have been referring to Deutsche Bank, whose strategy to close its €5 bn capital breach was recently questioned by some top of 20 investors on the grounds it could decrease the entity’s market share. Last week the biggest German bank was the first national institution launching a convertible and contingent (well-known as CoCos) bonds issue valued at €1.5 bn, with the aim to increase capital before the ECB’s tests come.  All the EU entities want to look good in the picture, and then they currently develop and take different measures.

However, the European central bank’s vice-president Vitor Constancio suggested on Monday that the European banks already took action last year in order to show the best capital ratios possible, with spendings of €104 bn on sale of assets as well as capital and debt issues. These efforts have traslated into a recovery of confidence by financial markets and a positive performance of entities in stock exchanges.

About the Author

Julia Pastor
Julia Pastor has broad experience in business writing for Consejeros Media Group at Consejeros, Consenso del Mercado and The Corner. Previously, she worked for the financial news agency GBA and contributed to El País Business. She holds a Master's in Financial Journalism and a degree in English from the Complutense University in Madrid.

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