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Europe's Bank Stress Tests are Missing One Crucial Element

Stress tests for European banks may be overlooking the damage caused to lenders by negative yields.
Deutsche Bank AG Headquarters As Lender To Shrink Workforce By About 26,000
Photographer: Jasper Juinen/Bloomberg

Even before the results of European bank stress tests are announced tonight, Jim Reid thinks regulators might have missed something.

The Deutsche Bank AG credit strategist says negative bond yields — a scourge for lenders and investors alike — appear to have been overlooked. That could be quite an omission since sub-zero yields are a product of the negative interest rates that have been proving so troublesome for Europe's banks.