Germany: stress tests were 'not worth the stress'

Writing in Handelsblatt, leading German columnist Robert Landgraf thinks the much-hailed and highly anticipated banking stress tests were a waste of time and effort.

He said European regulators felt overly stressed and will have lost a great deal of sleep 'because they were forced by politicians to conduct a test with limited value.'

'Financial regulator Bafin and the Bundesbank already had a much deeper understanding of financial institutions' positions before the European test,' Landgraf wrote in his column, pointing out that domestic regulators have been putting in the hard work to fix Germany's troubled banks a long time before the stress tests were thought up.

Indeed, he points out the rescue fund Soffin has long been established to provide capital injections and debt guarantees, and troubled Hypo Real Estate -  the only German institution to fail the stress test - was nationalised to avert bankruptcy at the peak of the crisis. 

'Yet finance ministers do not seem to care; they followed Spain’s call for a stress test like lemmings,' Landgraf wrote. 'Scared by the debt crisis, they were willing to do almost anything.'

He thinks the stress tests were based on a US model which is not applicable to Europe's hetergenous markets.

'It does not make sense to lump together 91 banks from 20 different countries,' he said, also criticising the timing of the publication of the results. 

'Why would they choose to publish the results at a time when most markets in Europe where closed or about to shut down their computers? Do we want to have American investors tell us what to do before we act ourselves? No thank you!'

His full column can be found on the Handelsblatt website here.