25 eurozone banks fail in European Central Bank financial health test
27 Oct 2014 10:55 PM GMT
Roughly one in five of the euro zone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the European Central Bank said on Sunday.
The ECB found the most critical problems to be in Italy, Cyprus and Greece but concluded that banks' capital holes had since chiefly been plugged and that only 10 billion euros remained to be raised. Italy's financial sector faces the biggest challenge with nine of its banks falling short. Monte dei Paschi had the largest capital hole to fill at 2.1 billion euros, even after its money raising efforts this year. The exercise provides the clearest picture yet of the health of the euro zone's banks more than seven years after the eruption of a financial crisis that almost bankrupted a handful of countries and threatened to fracture the currency bloc.
Although investors may take heart, it remains to be seen whether the exercise can spur banks to lend more as the region's economic growth stutters to a virtual halt.
The ECB found the most critical problems to be in Italy, Cyprus and Greece but concluded that banks' capital holes had since chiefly been plugged and that only 10 billion euros remained to be raised. Italy's financial sector faces the biggest challenge with nine of its banks falling short. Monte dei Paschi had the largest capital hole to fill at 2.1 billion euros, even after its money raising efforts this year. The exercise provides the clearest picture yet of the health of the euro zone's banks more than seven years after the eruption of a financial crisis that almost bankrupted a handful of countries and threatened to fracture the currency bloc.
Although investors may take heart, it remains to be seen whether the exercise can spur banks to lend more as the region's economic growth stutters to a virtual halt.
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