Date: Friday 16 Jul 2010
Jean-Claude Junker, the president of the Eurogroup of eurozone finance ministers, doesn’t expect any ‘catastrophes’ when the stress test results for European banks get published next week.
When asked by Austrian newspaper Kurier if he expects some banks to fail, he said: "I am not expecting any big catastrophes."
He added that the eurozone’s single currency remains strong. “"The euro will outlive its critics, it is not in danger," he said.
All major European banks will be 'stress-tested' by the European Union to measure their ability to withstand another major financial shock in future, though the main focus of the tests seems to be on the smaller regional banks in Spain, Greece and Germany, where concerns over debt defaults have been greatest.
The EU’s Committee of European Banking Supervisors said collectively the banks represented 65% of the European Union's banking sector. They account for at least 50% of the banking sector in their respective countries.
The 91 banks will be assessed first on the basis that economic growth is 3% below forecasts in 2010 and 2011 and then a deterioration of market conditions similar to the May where fears of sovereign debt defaults swept through markets. Results of the test will be published next Friday.
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