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World

Stress test shows some EU banks in poor health

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Opening sequence

World

Stress test shows some EU banks in poor health

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COMING UP:Stress test shows some EU banks in poor health

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00:00:00
>> It's eight years since the collapse of Lehman Brothers sparked the global financial crisis, but some of Europe's banks are still struggling to recover. In the latest stress test on 51 of the block's lenders, individual banks in Italy, Austria, Spain and Ireland have all fared badly. Italy's third largest lender Monte dei Paschi coming bottom of the class.
00:00:24
Germany's biggest banks, Deutsche Bank and Commerzbank also among the 12 weakest along with British rival Barclays. But despite the fault lines, Reuters correspondent Huw Jones says regulators are genuinely satisfied with the outcome.>> This is the third stress test since the financial crisis. And it's the first one with no pass and fail.
00:00:44
Cuz regularly there's a saying, well the big job of rebuilding capital is basically done. You have a few outliers like Monte dei Paschi. But basically, by and large, the system has enough capital now.>> The stress test looked at how banks would be able to deal with a three-year economic shock.
00:01:01
But Joan says some industry experts don't think the health check goes far enough.>> It's not as tough as the American test that's done every year and that may be the biggest fault line in Europe. Because if you look at the book value of lenders, in the states they're far higher than they are in Europe and people say that's because banks in Europe haven't really cleaned up the balance sheets.
00:01:26
They haven't really removed all the skeletons, and thrown them away. And until they do that, and have really truly tough test that cleans out the skeletons. Investors are really going to prefer putting their money into American banks.>> Analysts will now start crunching over 12,000 data points on each lender as investors wait to find out where the safest place is to put their cash