ECB Stress Test Better Than First Expected

Most of the lenders that failed the European Central Bank’s balance-sheet test have been let off for good behavior.

Only eight lenders haven’t already plugged capital gaps or satisfied the ECB with plans to shrink, out of 25 found with a shortfall. That means just 6.35 billion euros ($8 billion) remains from a 25 billion-euro hole, and half of that is in Italy. The ECB, releasing results of its year-long bank audit yesterday, said investors should focus on the insight they’ve gained into lenders’ books instead.

Just over a week before the central bank becomes the financial supervisor of the euro area, officials are attempting to end half a decade of financial turmoil with full disclosure on any bad loans and mispriced assets. The ECB is staking its reputation on this exercise convincing investors that lenders are clean and can again play a role in reviving a stalling economy.

Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.