The results of stress-testing banks in Europe had underestimated the risks of gosobligatsiyam

The results of stress-testing banks in Europe, published in July, underestimate associated with investments in state bonds risks. This study found The Wall Street Journal.

As part of the stress tests in 1991 the largest bank in Europe had to disclose the volume of investments in government securities of European countries on 31 March. But the analysis disclosed information has shown that not all banks have provided complete data.

Some banks, for example, Barclays Plc and Credit Agricole SA, was expelled from reporting a number of categories of bonds, while others did not take into account the value of open their "short" positions. Therefore, to reliably estimate the risks of banks in the government bond portfolios is difficult, and the limited amount of information provided by regulators, has had a negative impact on the accuracy of stress tests as a whole.

Given that the main purpose of stress tests was to restore the confidence of investors and bankers to Europe's financial system by increasing the transparency of the banking system, insufficient disclosure of information could have negative implications for market stability.

Positive stress test results (only seven banks failed to meet the criteria and the amount they need additional capital was estimated only 3.5 billion euros) initially calmed markets. But with the advent of autumn, fear of investors resumed. In particular, it confirms the rising cost of insurance of bank and government bonds Portugal, Ireland, Greece, Italy, on default of the above levels before the stress test.

Differences in risk assessment on the basis of stress tests and quarterly study of the Bank for International Settlements (BIS) is enormous. Thus, the overall risks of French banks in the segment of the Spanish government bond on March 31 to evaluate in the stress tests in the 6.6 billion euros, while the BIS results in the number of 34.7 billion euros. Risks on Portuguese bonds is 4.9 billion euros, according to the stress tests, and 15.1 billion euros, according to BIS.

Experts say that one reason for such a large discrepancy was the lack of adequate procedures for the disclosure of such information.