Newsletter April 2011: EU bank stress tests use 5% capital benchmark

LONDON – European supervisors have decided to use a 5% core Tier 1 capital ratio as the benchmark for the stress testing of EU banks that is now underway to assess how many of them are strong enough to withstand further adverse shocks. The 5% benchmark ratio, announced in early April by Andrea Enria, chairman of the European Banking Authority (EBA), the new London-based supervisory agency, is viewed by some critics as insufficiently tough.