Sunday 4 December 2016

EU may release stress results after markets close

banking

Ben Moshinsky

Published 22/06/2011 | 05:00

The European Union's top securities regulator is recommending the release of the bank stress-test results at night, or on a weekend when global stock markets are closed, according to a person familiar with the situation.

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The European Securities and Markets Authority wrote to the European Banking Authority, the London-based EU agency carrying out the tests, calling for publication of results while markets are shut, said the person, who declined to be identified because the talks are private.

Sensitive

While a date for the results hasn't been set, regulators expect them to be released in mid-July, the person said.

The stress-test results were published on July 23 last year while US markets were still open.

If it opts to release the data on a weeknight, the EBA has a two-hour window to coordinate publication. US markets close at 9 pm, GMT, and the New Zealand exchange opens two hours later.

"Like any market-sensitive announcement it should be done when the markets are closed," Fred Ponzo, managing partner of capital markets consultants Greyspark Partners, said in a telephone interview.

"Doing it when New York, London, Hong Kong and Tokyo are closed is just good practice," he added.

Some 91 banks will be expected to maintain a Core Tier 1 capital ratio of at least 5pc under the stress-test scenarios, the EBA said.

That capital measure is stricter than last year's assessment, which had a pass rate of 6pc Tier 1 capital, a measure of financial strength that encompasses a broader range of securities.

Resilience

Officials at ESMA didn't respond to requests for comment.

Franca Rosa Congiu, an EBA spokeswoman, declined to comment.

This year's exams will test banks' resilience to a 0.5pc economic contraction in the euro area, a 15pc drop in equity markets and a 125 basis point jump in short-term inter-bank financing costs.

Standard & Poor's own stress test, published in March, found European banks would need as much as €250bn in fresh capital if faced with a "sharp" increase in yields and a "severe" economic downturn.

In contrast, a survey of 113 investors by Goldman Sachs Group earlier this month showed they expect banks to raise €29bn after the tests.

Irish Independent

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