European Stress Tests to Examine Banks’ Readiness for Basel III

European regulators were criticized by German banks for a plan to incorporate into this year’s stress tests global capital standards that aren’t scheduled to be implemented for eight years.

The European Banking Authority will review the amount of “higher quality and most loss-absorbing” capital on banks’ balance sheets, Andrea Enria, the group’s chairman, said in Vienna this week. The move was criticized by regional German banks including Norddeutsche Landesbank and Landesbank Hessen-Thueringen because the tests may exclude a form of non-voting capital, known as silent participation, which that country’s regulators allow to be counted toward a bank’s reserves.