In the previous (lengthy) post I covered my view of the ECB stress tests results. But, per chance, you have missed two core points on these, here they are, in a neater summary:
Point 1: Stress tests are weak compared to expectations and independent analysts’ estimates of capital shortfall (by a factor of up to or in excess of10:1).
Point 2: Stress tests have raised non-performing loans levels in the euro area banking system by EUR136 billion to EUR879.1 billion or close to 9% of the euro area GDP. The increases were recorded in all categories of loans, which in simple terms means the banks have been under-providing for loans losses across all categories of their core assets.
This post was published at True Economics on October 27, 2014.
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