European banks tremble

 

 

European banks and financial officials are all awaiting in a mix of hope and fear to learn just how the European Central Bank will assess the solvency of European banks.

Analysts at Royal Bank Of Scotland ( RBS) presented their expert report following the announcement of the European Central Bank (ECB) to assess the financial health of 124 European banks.

RBS analysts estimate that the eleven largest European banks would need to add 47 billions in the next five years. In order to collect this amount, the banks will have to set aside their pending results to get 18 billion euros and the rest will be collected through capital increases and also by easing their balance sheet by selling assets and activities.

The assessment will start in November 2013 and will take 12 months to complete. It will be carried out in collaboration with the national competent authorities (NCAs) of the Member States that participate in the single supervisory mechanism and will be supported by independent third parties at all levels at the ECB and at national competent authorities.

Seven years after the financial crisis of 2007, ECB starts comprehensive assessment in advance of its supervisory role. The financial officials are worry about the results, specially, after U.K fine 1.3 billion pounds ($2 billion) to compensate customers who were wrongly sold insurance to cover credit-cards and after the $ 2.5 billion fines against UBS, Barclays and RSB for having manipulated the Libor rate.

The Euro which currently maintains a high level, against the weaker dollar, could be deteriorated if the ECB assessment results will be negative. But in the meantime, it will be a difficult year for the European currency.