German Warning
Stress tests risk worsening the sovereign-debt crisis and making lenders the target of speculators because the level of detail being published is too high, according to Germany's banking associations.
"Given the tense situation which already exists in money and capital markets, we believe publishing the results with the present level of detail would exacerbate the sovereign-debt crisis," the ZKA Central Credit Committee said in a letter obtained by Bloomberg News yesterday.
"To avoid further capital market turmoil, which would fly totally in the face of what the stress test was actually intended to achieve, we believe the level of detail needs to be significantly reduced," the committee said.
European regulators are seeking to assuage investor concern that banks in the region aren't adequately capitalized with the second round of stress tests using tighter definitions of bank capital and forcing firms to disclose more about government bonds holdings. The prior tests were criticized for not being stringent enough.