Spain, Greece downplay stress test failures

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Spain, Greece downplay stress test failures

Spain, Greece downplay stress test failures
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The finance ministers of Greece and Spain on Friday downplayed the findings of a Europe-wide health check of the banking sector after seven lenders in those two countries failed so-called stress tests.

Five banks in Spain and two Greek banks were found to not hold enough capital to withstand another financial crisis and must raise more money.

But Spanish Finance Minister Elena Salgado told reporters that she did not believe that the country’s banks which failed the tests needed to find new financing.

“The key question is do they need more capital to deal with an extreme situation. I would argue that the answer is no,” she said.

The two Greek lenders to fail the tests were ATEBank and Eurobank, the country’s second largest lender.

State-run ATE is in the process of being sold off as part of an austerity package demanded by Greece’s international creditors, the EU and the IMF.

Greek Finance Minister Envangelos Venizelos also rejected the view that the banking sector in Greece was vulnerable to future shocks.

“The criteria were very strict, even extreme. For Greek banks, they were even stricter because of the national debt crisis,” Venizelos said.

“Our banking system can cope. It has sufficient core capital and fulfills the EU’s and IMF’s demands were even stricter.”

Austria’s Volksbanken also failed the tests, which market analysts have criticised as being too lenient since they failed to factor in a Greek sovereign default.