European banks’ north-south rift widens

The split between the southern European banking sector, dragged down by sovereign debt worries, and healthier northern European rivals has widened in 2011, putting pressure on weakly capitalised groups in Greece, Italy, Portugal and Austria.

In particular, the likes of Greece’s Alpha Bank, Italy’s UniCredit and Banco Espirito Santo of Portugal, as well as Austria’s Erste Bank and Raiffeisen, are under scrutiny, having been left behind in a recent dash to raise fresh capital.

In a report published on the 27 April 2011, analysts at Morgan Stanley say that of 22 banks that came close to failing a 2010 regulatory stress test – with a result within 2.25 percentage points of the 6% tier one capital ratio pass mark – 17 have now announced capital raisings. Only Erste, Raiffeisen, Alpha, UniCredit and BES have not.

ESO: Background information: EU watchdog to test bank capital http://www.europeansources.info/record/eu-watchdog-to-test-bank-capital/

---