The British banking sector faces a moment of truth today when European regulators reveal the keenly-awaited results of stress tests for 91 banks, including Britain’s big four players.
The Committee of European Banking Supervisors (CEBS), the London-based umbrella body for Europe’s financial regulators, was publishing the findings of its exercise designed to restore confidence in the wake of the financial crisis at 5pm.
Barclays, HSBC and their part-nationalised counterparts Lloyds Banking Group and Royal Bank of Scotland are on the list, which covers 65% of the European Union banking sector, according to the CEBS.
The banks have been “stress tested” to assess resilience and ability to withstand further economic and credit shocks.
Markets are hopeful the tests will be stringent enough to generate confidence in the battered European sector, which has suffered amid the fallout from the Greek debt troubles.
The UK’s Financial Services Authority (FSA) has said it expects the British banks to pass the test, having already subjected the groups to its own tough tests last year.
Shares in blue chip banks made solid gains yesterday as investors appeared optimistic, with Barclays up nearly 5% and rivals Lloyds Banking Group and Standard Chartered also seeing increases.
But there were reports that some smaller banks in Spain and Germany may have failed, which could further rock confidence in Europe.
Meanwhile, experts have also voiced fears that if the exercise is not seen as being credible, the results will not be taken seriously.