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Germany says no to EU bank stress tests

Germany says no to EU bank stress tests

German Finance Minister Peer Steinbrueck rejected stress tests for European banks, saying the bad publicity could harm banks already suffering from rising defaults on loans.
U.S. regulators have run tests on 19 of the country's largest financial firms to estimate the losses that banks would face if unemployment surges and house prices continue to plunge.
It has ordered several to hold larger capital buffers to protect them against future losses but has not named them.
Steinbrueck said similar stress tests in the European Union could multiply problems for European banks because naming and shaming the vulnerable could destabilize them further.
"I can see them bringing further embarrassment to a bank, that means a self-fulfilling prophecy," he told reporters after talks with EU finance ministers.
He said he would want to know what any EU plan mimicking the U.S. model would do with the results of the stress tests "so that it doesn't cause damage to banks."
The EU's executive commission warned Monday that banks could be hit by a bad debt spiral if fragile confidence is undermined by a deep recession that hikes defaults on housing loans.
That in turn could trigger a wave of business bankruptcies, slash jobs and trigger even more debt defaults, it warned.


Updated : 2021-03-05 08:44 GMT+08:00