Credibility of bank stress tests questioned

THE European Commission is being asked to explain why Allied Irish Bank received a clean bill of health in its stress test when it later needed an extra €3 billion from the Irish taxpayer.

Labour MEP Alan Kelly is calling into question the credibility of the stress tests to which 91 banks throughout the EU were subject in July. AIB was one of those that just scraped through, while Bank of Ireland fared somewhat better.

Mr Kelly said the test assumed the bank would raise €7.4 billion it needed in capital by the end of the year. However, the Government was forced to step in with a capital injection when it became obvious that AIB would not be able to raise the money.