Critical analysis of stress tests in the year 2011

Abstract

Stress Tests are conducted by national supervisors as well as by the European Banking Authority (EBA). This paper aims to make a critical analysis of the latest edition of the stress tests published on 15th July 2011. To achieve this objective, we have also established a secondary aim: to examine the financial and patrimonial situation of some of the European and Spanish banks in the period 2010-2012, taking into account the relevant EBA index. From the historical data available, we can conclude that the aggregate Net Equity of the example we analysed, from 2010, including the recapitalization estimated by the EBA, reached a level of Net Equity/Assets, not even reached by the equivalent figures for 1985 (without recapitalization). Considering that Net Equity constitutes a safety zone for creditors in general, it can be stated that this basic criterion of solvency has deteriorated