EU Stress Test May Trigger Capital Injection Of EUR 85 Billion

European banks may need to raise more than €85bn to bolster their capital after stress tests, according to Barclays Capital.

“We view the upcoming release of the European banks stress tests as a potentially important inflexion point for the market.”

Barclay’s Capital


Spanish savings banks, or cajas, may require €36bn, German Landesbanks could need €34.5bn, while the Greek banks may have to raise €8.6bn, according to analysts led by Jeffrey Meli in New York.

Portuguese lenders may require €5.9bn, the Irish Independent reports.

“We view the upcoming release of the European banks stress tests as a potentially important inflexion point for the market,” the analysts writes.

Adding: “They may ease concerns by ensuring that the sovereign crisis and a likely slowdown in European growth will not result in widespread bank failures.”

Investors are concerned that soured loans to real estate developers and holdings of bonds issued by governments of nations on Europe‘s periphery mean some lenders may have burned through their capital.

The European regulators are running stress tests on a total of 91 of the biggest banks, representing 65% of the European financial industry.

The results are due for partial publication on July 23.

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