Business World

Monday 20 November 2017

EU may release stress results after markets close


Ben Moshinsky

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.

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.


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.


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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