Italy's banks pass EU stress tests, banks announce

MILAN — All five major Italian banks subjected to EU banking stress tests showed capital reserves above the level needed to resist severe financial shocks, the banks announced separately on Friday.Italy's two biggest banks, Unicredit and Intesa San Paolo, weathered the tests best, boasting respectively at 7.8 percent and an 8.2 percent "tier one ratio" of capital after the cumulative effects of several adverse scenarios.Banco Popolare followed with a ratio of 7.0 percent, UBI with 6.8 percent and Monte dei Paschi di Siena with 6.2 ratio, all above the EU threshold ratio of 6.0 percent."The results of the stress tests show that Italian banks are solid and prepared to face the future," the head of the Italian banking association ABI, Giuseppe Mussari said in a statement."The sector is in excellent health and exhibits a high level of resistance to exceptional shock (confirming) the trust that families and businesses have always placed in the credit sector," he said.The Australian bank Macquarie recently cited Banco Popolare as one of the banks that might be unable to resist severe shocks.Italian banks did better than most of their peers during the financial crisis thanks to robust retail operations and limited exposure abroad, and none received state capital injections.The tests involved a total of 91 banks in the 16-nation eurozone plus Britain, Denmark, Hungary, Poland and Sweden to determine whether they have sufficient capital to withstand shocks such as those that caused the collapse of US investment giant Lehman Brothers in 2008. Copyright © 2010 AFP. All rights reserved. More »

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