Euro stress test

This graph from the WSJ highlights a “stress test” conducted by KBW on some of Europe’s biggest banks.  While the US followed 6% tier 1 ratio and 4% TCE, the EU perhaps needs higher ratios just because they are in worse shape than the US banks and therefore, would probably need for capital buffer.

euro stress

The US estimated some $75 billion additional capital infusion for its banks.  The report, on the other hands, suggests an amount about 8x as much – $600 billion, with the 16-nation Euro taking more than 60% of that.

Report by Fidler and Shah (WSJ)


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