THE EU authorities are preparing to deal with “pockets of vulnerability” after stress tests on 91 European banks, economics commissioner Olli Rehn has said.
Mr Rehn’s remarks late last night came ahead of a meeting today of EU finance ministers, who will discuss fresh efforts to bridge a gap with MEPs over the parameters of a new system of pan-European financial regulation.
With results of the stress tests to be made public on Friday week amid claims they will not provide sufficient reassurance on the health of banks, Mr Rehn is known to be pushing for the publication of individual banks’ exposure to sovereign debt.
After a meeting of euro group finance ministers, Mr Rehn said the EU executive was ready to rapidly review any requests to provide state aid to banks.
“I won’t be prejudging the results, but in my view the European banking sector is overall resilient but, at the same time, when you publish the stress test we will have to prepare for any possible pockets of vulnerability and for that is essential that the national backstops will be in place. Which is the case, they are in place,” he said.
He was speaking as newly installed Slovak prime minister Iveta Radicova came under pressure to sign up to the €440 billion euro-zone loan guarantee scheme for distressed single currency members.
Ms Radicova has yet to make good on a pledge by her predecessor to take part in the European Financial Stability Facility (EFSF) and remains opposed to Slovak participation in a separate fund for Greece.
“We made it clear in today’s discussion that our expectation was that the Slovak government will sign the framework agreement and it will take on board all the commitments which have been taken by the previous Slovak government,” said Luxembourgish prime minister Jean-Claude Juncker, president of the euro group. Mr Juncker, who said Ms Radicova’s resistance to the Greek scheme was the “most relevant” question, will raise the issue with her this morning.
The euro group meeting was addressed by EFSF chief Klaus Regling, who told reporters the new fund could begin its work very quickly. He also said the German public debt office – the Finanzagentur – will issue debt for the EFSF and carry out risk management, asset liability management and treasury operations for the body.
Mr Juncker lauded efforts by the Greek government to restore order in its public finances, indicating a €9 billion loan expected in two months is likely to be approved. “I am confident the results achieved by Greece will allow for the timely disbursement of the second tranche of the loans in September.”
The euro gathering followed a meeting on economic governance chaired by European Council president Herman Van Rompuy. He called for a wider range of financial and non-financial sanctions against EU states who flout budget rules but offered little detail.
Minister of State for Finance Martin Mansergh represented the Government at the meetings.
