24 European banks fail health check

Twenty four banks in the European Union have failed health checks of their finances, a European banking regulator has warned.

The European Banking Authority (EBA) identified a 25-billion-euro ($32-billion) shortfall for the banks, saying that 14 of the lenders must act to raise more capital to be able to endure a series of economic shocks, including high levels of unemployment and low economic growth.

The review, which was based on the banks’ financial health at the end of 2013, examined 123 EU banks.

The EBA report put the focus on Italian banks, Banca Carige, Monte dei Paschi, Banca Popolare di Milano, and Banca Popolare di Vicenza. It said the worst affected was Monte dei Paschi, which had a capital shortfall of 2.1 billion euros.

Austrian bank, Oesterreichische Volksbanken, Cypriot bank, Hellenic Bank Public Company, Irish bank, Permanent TSB, and Portugal’s Banco Comercial Portugues failed the stress tests, the EBA added.

Two Greek banks, two Belgian banks, and two Slovenian banks also failed the financial health check, meaning that they have not raised enough capital.

The EU banking regulator said the banks will have from six to nine months to fill the gaps.

“We are still far from a solution to the banking crisis and the challenges facing the banking sector,” Colin Brereton, from the world’s second largest professional services network, PwC, said.

Britain’s Royal Bank of Scotland, HSBC, Lloyds Banking Group and Barclays were also subjected to the EBA financial stress tests. The banks did not fail the health checks but Lloyds passed the tests narrowly, with capital under adverse scenarios of 6.2 percent, close to the 5.5-percent benchmark.

MOS/HMV/SS