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European Bank Stress Tests Get More Stressful When You Make Them American

The answers you get depend on who is asking the questions.
An illuminated euro currency symbol is projected on to the European Central Bank (ECB) headquarters during a rehearsal for the Luminale light festival in Frankfurt, Germany, on Saturday, March 12, 2016. The Luminale 2016 light festival is scheduled to begin on March 13 and runs through March 18.
Photographer: Martin Leissl/Bloomberg

The European Banking Authority's stress tests released on July 29 served as a key plank in the region's effort to publicly demonstrate to markets and regulators around the world that its banking system is on the mend.

But while the Stoxx Europe 600 Bank Index is up 2.79 percent since the results were announced, markets remain skeptical about the health of lenders in the region given the still low equity prices. The sector is trading at 0.64 times book value, compared with 0.85 at the end of last year, while non-performing loans continue to erode bank capital.