Greek debt writedowns part of fresh round of stress tests
EUROPE is set for another round of bank stress tests. EU finance ministers have asked the bloc's leading bank regulator to test the strength of Europe's banks on the assumption of a big write-down of Greek sovereign debt.
The move -- a clear admission that the two previous rounds of stress tests were not robust enough -- came as Angela Merkel said she was prepared to recapitalise her country's banks if necessary.
The German chancellor also suggested she wanted to discuss joint EU-wide bank support efforts at an EU summit in two weeks.
"We're under the pressure of time and need to take a decision quickly," Ms Merkel said, after meetings with the European Commission in Brussels.
The top three French banks -- BNP Paribas, Societe Generale and Credit Agricole -- all own huge stocks of debt issued by struggling eurozone countries like Italy, Greece and Spain.
Meanwhile, the three-notch slashing of Italy's credit status by Moody's on Tuesday is fuelling talk of the end of the Silvio Berlusconi era and a slow-moving rebellion within the prime minister's own party.