GULF DIGITAL NEWS
7th APRIL 2015 - Vol.XXXVIII No.018
Business News

Banks propose stress tests for EU states

BERLIN: Three major German banking associations have urged stress tests be introduced to assess the financial health of European Union member states.

In a joint letter to Angela Merkel, the associations said more attention needed to be paid to the mid-term borrowing goals in the EU, aligning itself with the German chancellor, who has urged the bloc to tighten rules on running up budget deficits.

"To this end, we should consider whether, after the successful stress tests for banks, stress tests should be performed to measure how solid member states' borrowing policies are," weekly newspaper Welt am Sonntag quoted banks as saying.

Germany's commercial banks association (BdB), the DSGV savings banks' association and the BVR, which represents co-operative banks, signed the letter, stressing their desire for a stable euro, also a mantra of the government.

The banks put forward a four-point plan to Merkel aimed at enforcing greater budgetary discipline.

These included recommendations that EU funds could be frozen or denied deficit sinners, and that member states could have voting rights suspended - another idea Germany has floated.

Meanwhile, the country's troubled Hypo Real Estate bank, which last year narrowly avoided bankruptcy before being nationalised, has paid 25 million euros ($32.6m) in executive bonuses. The property and municipal funding specialist paid out the bonuses for 2009 after executives threatened legal action, German weekly Der Spiegel said.

HRE board chairman Manuela Better gave the green light to fulfil a promise made by her predecessor Axel Wieandt, who left suddenly in March after disagreeing with Germany's banking sector stabilisation fund SoFFin over the question of remuneration.






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