The European Banking Authority has revealed details of the new round of EU-wide stress tests, in which ninety European banks will participate.
As expected, the core “tier 1” capital ratio has been set at 5 per cent, lower than the 6 per cent imposed on Irish banks during Ireland’s national stress tests.
In another example of the EU turning the screw, German regional banks – the Landesbanken – are among the institutions most likely to fail the tests, as the European Banking Authority has announced that its definition of “capital” will exclude most of the so- called “silent participations” – a type of subordinated debt provided to Landesbanken by German provincial governments.
The Minister of Finance, Wolfgang Schäuble, has said that German banks that fail the tests will not get any money from the state.
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