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ECB comprehensive banking assessment positive for the Euro - ANZ

FXStreet (Bali) - The EU‐wide stress test, which had as objective to assess the resilience of banks in the EU to adverse economic developments, should allay concerns about the health of the region’s banking system, notes ANZ, after results were published over by the EBA (European Banking Authority) over the weekend.

Key Quotes

"The results of the comprehensive assessment of the euro area’s 130 largest banks, covering 82% of credit provision and EUR22trn worth of assets, should allay concerns about the health of the region’s banking system."

"Only 13 banks need to raise a cumulative capital shortfall of EUR9.47bn – an amount equivalent to less than 0.1% of nominal annual GDP. They will present their plans in the next two weeks and will have 6 to 9 months to address their capital shortfalls."

"Following a very rigorous bank assessment where the 30 major lenders in the euro area strengthened their balance sheets by EUR203bn since the test was announced last July, the provision of credit should no longer be a constraint to growth, provided there is sufficient aggregate demand."

"At the margin, the comprehensive assessment should boost confidence in the banking system and may provide some support to risk assets and the euro."

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