Brussels, 15 July 2011
Statement by Commissioners Barnier and Rehn following the publication by the European Banking Authority of the 2011 stress test results
"The repair of the EU banking sector is an important element of a comprehensive response to the current crisis. That is why we welcome the publication of the results of the EU wide stress test as they represent another step in this process of repair.
Today's results highlight that the great majority of European banks are now much stronger and better able to resist shocks. In anticipation of the test, many banks have already taken actions to strengthen the resilience of their balance sheet though private sector measures and government financial aid.
The EU-wide stress tests are more rigorous than those conducted previously. In particular, the definition of capital is stricter, the scenarios used are more severe, and for the first time, a thorough peer review exercise has been conducted to ensure coherence and consistency of results. We emphasise the full and detailed transparency attached to these tests, for example as regards sovereign exposures. The data is there for all to see including banks full exposure to sovereign debt.
We wish to congratulate the EBA, and particularly its chairman Andrea Enria, for being demanding throughout the exercise, sometimes in difficult circumstances, and his dedication to ensuring the overall credibility of the exercise.
For those banks that have not met the threshold, and for those that have but still demonstrate substantial weaknesses, we expect them to take all the necessary steps to reinforce their capital positions. As the Ecofin Council of 12th July confirmed, backstop measures have been drawn up by Member States should remedial actions become necessary in response to the vulnerabilities indentified by the tests. Priority is to be given to private sector solutions, while a solid framework for the provision of government support in case of need in line with state aid rules, has been agreed. The Commission will deal with any requests cooperatively and quickly, as we have done in the past,
It is important that stress tests are understood for what they are: an essential piece of the puzzle, but not the whole solution, in making the whole financial sector more robust. These results should be seen in the context of a broader effort to reform the EU financial sector and safeguard financial stability. All financial actors in all markets must be properly regulated and supervised. We have already put in place a new framework for financial supervision at a European level. Next week, the European Commission will make proposals to require banks to hold more capital, of better quality, as well as introduce requirements for the first time relating to liquidity and excessive leverage, so that banks can better withstand financial shocks and longer-term funding stresses.
We will remain vigilant and continue monitoring the resilience of the EU financial sector. But we are confident that all these actions, when fully implemented and considered comprehensively, will ensure the financial sector is safer and sounder, and better able to do its job in supporting the real economy."