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European bank shares react to stress tests Italy's Monte dei Paschi shares suspended after 'stress tests'
(35 minutes later)
Shares in Europe's banks have reacted strongly to the stress tests of their finances, which saw 24 fail and 14 still needing to raise more capital. Trading in shares of Italy's Monte dei Paschi and Carige banks has been suspended after sharp falls.
The tests, by the European Banking Authority (EBA), led to some bank shares rising in relief while other banks have seen sharp falls. Monte dei Paschi's shares dived 17% in early Monday trading after it emerged that it was the worst performer in official stress tests.
Shares in Italy's Monte dei Paschi bank, which fared worst in the tests, dived 15% before being suspended. In all, 24 of 123 banks failed the European Banking Authority (EBA) tests, designed to find out if they could withstand another financial crisis.
Lloyds Banking Group shares fell 2.5% after it narrowly passed the tests. Share prices in most EU banks are down following publication of the results.
Most European bank shares rose. Lloyds Banking Group shares fell 2.3% after it narrowly passed the tests.
Austria's Erste Bank, Raiffeisen and Germany's Commerzbank were all 5% higher at the start of trading, although Commerzbank fell back to stand 2.5% higher. All UK bank shares - Barclays, RBS, HSBC, Standard Chartered and new joiner TSB - are lower.
Monte dei Paschi bank was founded in 1472 for the purpose of granting loans to "poor or miserable or needy persons".
A handful of the strongest remain higher.
Austria's Erste Bank, Raiffeisen and Germany's Commerzbank were all up 5% at the start of trading, although Commerzbank fell back to stand 1% higher.
Financial healthFinancial health
The health check was carried out on 123 EU banks by the EBA to determine whether they could withstand another financial crisis. The health check by the EBA was based on the banks' financial health at the end of 2013.
The review was based on the banks' financial health at the end of 2013. No UK banks failed the EBA tests. Of the 24 banks that did fail, 10 of them have taken measures to bolster their balance sheets in the meantime.
No UK banks failed the EBA tests. Of the 24 banks that failed the EBA tests, 10 of them have taken measures to bolster their balance sheets in the meantime. There are 14 banks that still need to raise more capital. Four are Italian, two Greek, two Belgian and two more Slovenian.
Of the 14 banks that still need to raise more capital, four were Italian, two were Greek, two were Belgian and two were Slovenian.
Also on Sunday, the European Central Bank (ECB) carried out an overlapping survey of 130 eurozone banks.Also on Sunday, the European Central Bank (ECB) carried out an overlapping survey of 130 eurozone banks.
The ECB said 25 banks had failed its test, but 12 of those had already taken remedial action.The ECB said 25 banks had failed its test, but 12 of those had already taken remedial action.
The ECB's total is higher than the EBA's because of Spain's Liberbank, which passed the stress test but failed the ECB's Asset Quality Review.The ECB's total is higher than the EBA's because of Spain's Liberbank, which passed the stress test but failed the ECB's Asset Quality Review.