The European Central Bank (ECB) together with The European Banking Authority (EBA) had failed 25 banks in the recent Euro Zone Bank stress test. The reason behind this assessment is to evaluate the performance of the banks adverse economic conditions and the ability to withstandtimes of economic stress.
The 25 who failed were among the 123 lenders who took part in the assessment. This means that these 25 banks are very vulnerable to credit risks and are least likely to survive in adverse economic conditions.Italy, Europe’s fourth-largest economy suffered the worst count where 9 of the country’s 21 banks examined failed the test. For now, the banks that failed the stress tests have nine months to secure funds to cover their deficits.
However none of Europe’s largest banks were found lacking. No French, German or Spanish institutions were required to raise more capital. With a better result as compared to 2011, these may be the reason why Euro was seen trading higher on Monday.
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