Deutsche Bank accused of reneging on stress test

Six of the 14 German banks that were stress-tested among 91 European banks across 27 countries have been accused by European regulators of failing to disclose full details of their sovereign debt holding as part of the four month-long stress test exercise of the country’s banking sector.

Arnoud Vosen, Secretary-General of the Committee of European Banking Supervisors (CEBS), the pan-European banks regulator in charge of the tests, told the Financial Times that a bank-by-bank disclosure of sovereign risks was agreed upon in advance “with all supervisory authorities and with the banks in the exercise".

However, six German Banks, including Deutsche Bank, Postbank, Hypo Real Estate, mutual groups DZ and WGZ, and Landesbank Berlin, did not publish the detailed breakdown, the FT said.

On July 23, the CEBS announced the results of stress tests of 91 banks, covering at least 50 per cent of each domestic market and 65 per cent of the overall EU banking sector.

The results were in accordance with analysts’ expectations that five to 10 banks, none of them large, would fail the test: five Spanish cajas, Germany’s Hypo Real Estate (HRE) and Greece’s ATEbank didn't meet criteria.

The recapitalisation needs amount to €3.5 billion ($4.5bn/Dh16.5bn).

The tests, which the CEBS says were more severe than those in the US, do not assume a sovereign default as this is seen as unlikely.

The head of the CEBS says the released findings on total exposure to sovereign debt by most individual banks are detailed enough for investors and analysts to build their own scenarios.

However, the FT referred to unnamed analysts saying that the German banks’ non-compliance would fuel suspicion that they had something to hide, and risked undermining faith in the whole stress test exercise.

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