Banking stress tests expose seven failures, but AIB and BoI pass

Stress tests of 91 banks across Europe to gauge their ability to weather a new financial storm have revealed seven failures, regulators said today.

The Committee of European Banking Supervisors (CEBS) – the London-based umbrella body for Europe’s financial regulators – carried out the tests on banks representing 65% of total European banking assets.

CEBS said total bank losses under its scenario of lower-than-expected growth and increased sovereign credit risk would amount to €566bn.

Bank of Ireland and AIB both passed the tests, with the EU regulators finding they do not require additional capital, beyond what was set out in March of this year.

The results of this process are consistent with a stress-testing exercise carried out by the Financial Regulator on the two State-backed institutions last March.

In a statement this evening, the Financial Regulator Matthew Elderfield said work would continue to keep the capital position of the Irish banking sector under review. He did not rule out further stress-testing exercises in the future.