European bank stress test results awaited

European bank stress test results awaited

The health of Europe's banks will come under scrutiny again later, when the results of EU-wide bank stress tests are published.

Results for a total of 91 banks across Europe will be made public, in a move designed to reassure investors over the health of Europe's financial sectors.

The tests assess whether banks will be able to survive future economic shocks.

The UK's four major banks - RBS, Lloyds, HSBC and Barclays - have been among those tested.

The Financial Services Authority has already said it expects the UK banks to pass the tests.

Savings banks in Germany and Spain - deemed more fragile by many analysts - are also included, with a total of 27 Spanish banks subject to testing.

Spanish regional lenders in particular are a cause for concern, having racked up heavy losses following the collapse of the Spanish property market.

In France, the results of tests on four banks are due.

Capital requirements

Christian Noyer, the head of France's central bank, said that there was "no reason" to believe French banks would fail the tests, while Spanish authorities have also expressed confidence.

In Greece, where sovereign debt problems caused a Europe-wide crisis earlier this year, six major banks will come under scrutiny.

Earlier this week the Greek finance minister George Papaconstantinou said he expected the banks to pass the tests "unscathed".

In order to pass the tests, banks must show that their levels of capital would remain high enough to satisfy regulators given certain scenarios.

These scenarios include an unexpected fall in economic growth, and a worsening of conditions in the government bond markets.

The results will be announced by the Committee of European Banking Supervisors.

Investors appeared optimistic about the forthcoming results.

In London on Thursday, financial stocks were trading strongly, with shares in Barclays up more than 4.6%.

In Frankfurt, Deutsche Bank was among the big risers, adding 4.1%, while in Paris the French lender Credit Agricole was up more than 5.5%.