Many German banks have not followed through on an agreement made by the governments of EU countries to publish full individual details by bank of the sovereign debt holdings of the banks, as part of the European bank stress tests that were released Friday, according to an interview with a top regulator published by FT.
“We agreed with all supervisory authorities and with the banks in the exercise that there would be a bank-by-bank disclosure of sovereign risks,” Arnoud Vossen, secretary-general of the Committee of European anking Supervisors (CEBS), the pan-European bank regulator, told FT.
On Friday, CEBS published the results of the stress tests, showing that only seven of the 91 EU banks tested failed to maintain adequate capital. They will have to raise additional capital.
The relatively few banks that failed the test, and the small amount of the capital shortfall, were well below market expectations, leading many analysts to criticize the test as insufficiently stringent.
Six of the 14 German banks tested — Deutsche Bank, Postbank, Hypo Real Estate, mutual groups DZ and WGZ, and Landesbank Berlin did not publish detailed accounts of their sovereign debt holdings, although Postbank released some information Sunday. All but one other European bank tested — Greece’s ATEbank, which failed the test — disclosed its sovereign debt holdings.
The failure to disclose suggests that the German banks have something to hide and risks further undermining the credibility of the whole stress test exercise.
German officials claim local law prohibited them from forcing the banks to publish such details.