Euro bank periphery still a burden

Ian Rogers
All banks in Australia with European owners passed the stress test conducted by the European Banking Authority, with results disclosed late last night.

Overall, Europe's banks were judged to face a shortfall of €24 billion in capital in 2016 under the most adverse scenario considered.

The results emphasise a story of "core and periphery" in Europe, with money centre banks in the UK, France and Germany mostly in fine fettle. 

Estimated capital shortfalls remain concentrated in countries such as Greece and Italy, though Spain's banked all fared well.

Italy faces the biggest challenge, with nine of its banks falling short and needing to raise funds.

The assessment consisted of "a financial health check of 130 banks in the euro area covering approximately 82 per cent of bank assets."


On average, EU banks' common equity ratio drops by 260 basis points, from 11.1 per cent at the start of the exercise, after the "asset quality reviews adjustment," to 8.5 per cent after the stress.