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The European banking regulator launched a new inspection of banks in the region, testing scenario for a major restructuring of debts of all countries of the periphery of the Eurozone. The tests conducted by the European banking regulator (EBA), can identify a shortage of capital in the banking system on the continent of 200 billion EUR. To calculate the losses from debt restructuring of the EBA, which held a two-day crisis meeting of the board of directors, will use market valuations. The controller discussed with other EU institutions and European governments mechanisms that can be used to recapitalize banks forced. The new tests are a tacit admission that the previous two rounds of stress tests conducted by the regulator were not sufficiently serious. The move was taken after German Chancellor Angela Merkel announced that her country is ready to recapitalize banks if necessary. Merkel said at a meeting of European leaders in two weeks would like to discuss a coordinated plan to support the European banking sector.
“Time is pressing us and I think we need to make a decision quickly”, Merkel said after meeting with European Commission (EC) in Brussels. According to senior representatives of European administration, quoted by Financial Times, EBA is instructed to assess the exact amount of fresh capital needed to recapitalize the banking sector in each country. FT sources insist that this step does not mean that leaders of the European Union (EU) prepare bankruptcy of Greece. They say it’s just a precautionary measure for information that will help in negotiations to recapitalize the banking sector in the Union.
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New stress tests for the European banks
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