Stress Tests Considered Success

The stress testing of Euro-zone banks is generally considered to have been a success,restoring confidence to world markets.Despite skepticism from some economists as to the toughness of the tests,the Committee of European Banking Supervisors insists the tests were more severe than the U.S. stress tests of last year.The Euro-zone tests postulated a once in twenty years scenario,while the U.S. tests postulated a once in seven years scenario.The Euro-zone tests were based on a double dip recession,with a 20% stock plunge and four notch downgrade of credit ratings.
Among the 91 banks tested were HSBC,Lloyd's,Deutsche Bank,Commerzbank,Unicredit,Santander and National Bank of Greece.All but seven of the 91 banks passed,most of the failures being Spanish savings banks,as well as Germany's Hypo Real Estate Bank and Greece's ATE Bank.The national authorities are in close contact with these banks to assess the results and implications,in particular in terms of the need for recapitalization,the CEBS said.
On Tuesday,Deutsche Bank reported good earnings and made positive remarks on its outlook.German unemployment came in at 7.7%,while U.S. unemployment is at 9.7%.