STOCK MARKET WATCH -- Tuesday, 28 October 2014

[Demeter]

14. Under full capital rules, 36 EU banks would have failed test

http://www.reuters.com/article/2014/10/27/us-eu-banks-capital-idUSKBN0IG1RK20141027?feedType=RSS&feedName=businessNews

Europe's banking health check has shown countries and lenders are implementing global capital rules at vastly different speeds, and 36 companies would have failed if new capital rules were fully applied.

The euro zone is lagging behind countries outside the bloc in implementing the Basel III capital rules that are due to come into full force in 2019, potentially adding another challenge for the European Central Bank when it takes over supervision of euro zone lenders next month.

"On a fully loaded basis, many banks have only passed the stress test by very thin margins or could be challenged in meeting the requirements, so they will be expected to do more," said Carola Schuler, managing director for banking at ratings agency Moody's.

Some 25 European banks failed a health check of whether they could withstand a recession, and another 11 would have failed if the full Basel III rules had been applied, according to data from the European Banking Authority released on Sunday....

The divergence was substantial across countries.

Capital ratios for Greek banks were on average 7.8 percentage points lower under full Basel rules, and the difference for Irish banks was almost 7 percentage points. Ratios for Portuguese banks were 220 basis points lower on average and in Spain they were 100 bps lower.

On a full Basel III basis, five German banks, including HSH Nordbank and DZ Bank, would have failed, compared with just one - Muenchener Hypothekenbank - in the standard test.

But in Sweden, Denmark, Norway, Britain, Poland and Hungary, there was almost no difference between the full Basel III rules and the transitional numbers, because national regulators have effectively fully implemented the rules already.

WONDER IF THEY WILL RELEASE THE NAMES OF THE BANKS THAT WOULD HAVE FAILED...