BRUSSELS (MNI) – The transparency of European Union bank stress
tests is very important and will bolster investor confidence, ECB
President Jean-Claude Trichet said on Thursday, but declined to give any
more information about how the tests will be carried out.
Trichet said the decision by Europe’s leaders to publish the
results of the tests on July 23 was “very important” and that the ECB
was “very happy” about it.
“We are … convinced … that transparency has its virtue and that
the market … can see the results of those tests,” Trichet told at a
press conference in Frankfurt following the ECB’s July meeting. “We
think it is confidence-building.”
“Where necessary to address this challenge, banks should retain
earnings, turn to the market to strengthen further their capital bases
or take full advantage of government support measures for
recapitalisation,” Trichet said.
“Appropriate action will have to be taken where needed,” he added.
“Sound balance sheets, effective risk management and transparent,
robust business models are key to strengthening banks resilience to
shocks and to ensuring adequate access to finance, thereby laying the
foundations for sustainable growth, job creation and financial
stability,” Trichet said.
Asked if the Committee of European Banking Supervisors should have
released more information on the tests, Trichet said, “You wait for the
23rd of July and then you will make your judgement.”
At its meeting Thursday, the ECB left its key refinancing rate
unchanged at 1.0%, where it has been since a 25-point cut that was
decided at the Council’s May 7, 2009 meeting.
The ECB left the deposit rate — which is the floor for euro money
market rates — at 0.25%, and the marginal lending rate — which is the
ceiling — at 1.75%.
The next policy-making Governing Council meeting is scheduled for
August 5.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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