Will European stress tests boost U.S. confidence?
WASHINGTON — Stress tests on European banks, released Friday, concluded that only seven of 91 major European financial firms need to raise additional capital, but the results raised more questions for U.S. analysts than they answered. Taking a cue from a similar U.S. confidence-building measure last year, European regulators subjected bank balance sheets to stress testing to gauge how they’d perform if much of Europe slid back into recession and financial markets plunged. The Committee of European Banking Supervisors reported that five Spanish banks, a Greek bank and a German bank lack sufficient capital to survive a sharp downturn. The seven were ordered to raise a total of 3.5 billion euros (about $4.5 billion) in additional capital.
