October 2011 and Dexia, one of Europe's largest banks, is bankrupt. How is that it had passed the June 2011 EU-wide Stress Test with flying colors? Reflect on that.
2011 EU-wide stress test results: no need for Dexia to raise additional capital
Dexia was subject to the 2011 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with the National Bank of Belgium, the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB). The EU-wide stress test, carried out across 91 banks covering over 65% of the EU banking system total assets, seeks to assess the resilience of European banks to severe shocks and their pecific solvency to hypothetical stress events under certain restrictive conditions. The assumptions and methodology were established to assess banks’ capital adequacy against a 5% Core Tier 1 capital benchmark and are intended to restore confidence in the resilience of the banks tested. The adverse stress test scenario was set by the ECB and covers a two-year time horizon (2011-2012). See more details on the scenarios, assumptions and methodology on the EBA website: http://www.eba.europa.eu/EU-wide-stress-testing/2011.aspx
5 comments:
Living in Europe I'm actually not too worried about all the malaise.
But then again, I'm from the Netherlands.
I doubt that the 'stress tests' conducted here are anymore honest.
~Mark Doane
I'm so relieved we can count on the solvency of all the other banks.
Anon.
According to the test, they are a bit less solvent than Dexia.
Actually, I suspect there is no end to the bad news, and they are just dribbling it out slowly so as not to alarm us too much.
Anon.
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