By Patrick Jenkins and Brooke Masters in London and Miles Johnson in Madrid
Europe?s banks are growing increasingly angry over the stress testsbeing run by European regulators, complaining that the process has been excess-ively rigid, with damaging changes to the exercise rushed through at the last minute.
The tests, the results of which are due to be announced next week, have been in preparation since March, but banks are furious that less than a month ago they were forced to rerun the stress scenarios along far tougher lines than had been originally suggested.
Bankers and analysts believe that up to a dozen banks may fail the tests, most in Spain, Germany and Greece. One listed Spanish bank said: ?There?s a feeling they want some Spanish banks to fail to make it look like they are being tough.?
But it is not just those that are set to fail that are complaining. Executives at some of the biggest banks, such as BNP Paribas, Deutsche Bank and Barclays, have also been critical, irked that the European Banking Authority, which is running the process, initially asked banks to make their own risk assessments before imposing scenarios last month.
Last month, Jochen Sanio, head of German regulator BaFin, was publicly critical of the EBA, accusing it of acting ?without legal authority … or legitimacy?. Banks in Spain and Germany are the most upset, complaining that the idiosyncrasies of their own national loan loss provisioning and capital standards have been ignored in the name of pan-European consistency – an absurdity, they say, when day-to-day responsibility for regulating banks remains national.
?It?s bloody difficult to compare banks on a European basis when they?re subject to different rules on a national basis,? said one senior German banker.
The EBA declined to comment but it has previously criticised the optimistic assumptions made by some banks in initial submissions.
? The Financial Times Limited 2011