EU bank stress tests to made 'regularly': Trichet

December 11, 2010 | 10:09

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The president of the European Central Bank, Jean-Claude Trichet, Friday said bank stress tests were "useful" and would be organised regularly in the European Union.

"Stress tests are useful and will be made on a regular basis," he told a news conference after attending a Madrid conference on cooperation between eurozone and Latin American central banks.

The stringency of European stress tests has been called into question by the markets.

Bank of Ireland and Allied Irish Banks passed the exams in July, only to be propped up by the state a few months later in a move that helped push Dublin into needing an 85-billion-euro rescue package from the European Union and IMF.

"Stress tests are a very useful concept and tool. It is certainly important that they are made on a regular basis," Trichet said.

The EU economic affairs commissioner, Olli Rehn, said this week new "even more rigorous and even more comprehensive" stress tests would be organised in February, this time including a look at liquidity positions.

The tests are designed to determine the financial capacity of banks to withstand economic crises of varying degrees of severity.

Of 91 European banks tested last July, only seven -- five in Spain, one in Germany and one in Greece -- were found to be vulnerable to economic stress.

AFP

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