Nordic banks pass stress tests

European Banking Authority has published results of the 2011 EU-wide stress tests for 90 banks in 21 countries. All 10 Nordic banks involved in the latest stress tests passed comfortably. They were Nordea Bank (OMXS: NDA, OMXH: NDA1V), Skandinaviska Enskilda Banken (OMX: SEB A, STO: SEB C), Svenska Handelsbanken(OMX: SHB A) and Swedbank(OMX: SWED) from Sweden, Danske Bank (OMX: DANSKE), Jyske Bank (OMX: JYSK), Nykredit Bank and Sydbank (OMX: SYDB) from Denmark, DNB NOR (OSE: DNBNOR) from Norway and Pohjola Bank (HSE: POH1S) as a part of OP-Pohjola group from Finland.

Eight banks were below 5% Core Tier 1 T capital threshold and sixteen banks between 5% and 6% CT1R. EBA is formally recommending national supervisory authorities to require those banks under 5% CT1R to promptly remedy capital shortfall. Those failing the tests were all small banks. Five of them are in Spain, two in Greece and one in Austria.

While stricter than the tests last year, these tests have been also been blamed too soft and authorities are worried markets will view the fact that the tests do not include Greek default provision as a reason to panic. Also some have worried about the great detail that banks are revealing about their specific exposures to provide bad incentives. More information is available here.