Stress Tests Show Only 8 Banks Fail |
- Out of those 8 banks – 5 Spanish, 2 Greece, 1 Austrian failed.
- 16 banks passed the tests “narrowly.”
- €2.5 billion of capital needs to be raised.
- Under the adverse scenario, the banks would lose €400 billion which represents 40% of core capital.
Here is the Summary Report from the EBA:
The EUR crosses were mildly positive in the 5 minutes after the release, but the EUR/USD after testing 1.4188, fell back down to where it was trading before the release.
The low figure that will be needed to be raised is much below the expectations of the market, which was pegging a figure between €20 billion – €35 billion.
That can create some concern in regards to the validity of the tests, and we will be looking at the 16 banks that passed narrowly – and the market may as well – as banks that are on the edge.. That would bring the total number of banks that would be in serious trouble at 24, also what the market was expecting ahead of the report.
The devil will be in the details, so it may take some time to digest the report before the EUR takes a decisive direction.
Nick Nasad
Chief Market Analyst
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
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