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Italy's Monte dei Paschi shares suspended twice after 'stress tests' Italy's Monte dei Paschi shares suspended twice after 'stress tests'
(about 7 hours later)
Trading in shares of Italy's Monte dei Paschi bank has been suspended twice. Trading in shares of Italy's Monte dei Paschi bank was suspended twice on Monday because of heavy losses.
Monte dei Paschi's shares dived 17% early on Monday after it emerged as the worst performer in official stress tests. Trading resumed later but was again halted after losses reached 20%. Monte dei Paschi's shares eventually closed 21.5% lower after it emerged as the worst performer in official stress tests.
In all, 24 of 123 banks failed the European Banking Authority (EBA) tests, designed to find out if they could withstand another financial crisis.In all, 24 of 123 banks failed the European Banking Authority (EBA) tests, designed to find out if they could withstand another financial crisis.
Share prices in most EU banks are down following publication of the results. Share prices in most EU banks fell following publication of the results.
Lloyds Banking Group shares fell 2.4% after it narrowly passed the tests. Lloyds Banking Group shares closed down 1.8% after it narrowly passed the tests.
All UK bank shares - Barclays, RBS, HSBC, Standard Chartered and new joiner TSB - are lower. All UK bank shares - Barclays, RBS, HSBC, Standard Chartered and new joiner TSB - also closed lower.
Monte dei Paschi bank was founded in 1472 for the purpose of granting loans to "poor or miserable or needy persons".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. A handful of the strongest banks saw their shares rise, including Austria's Erste Bank and Germany's Commerzbank.
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 by the EBA was based on the banks' financial health at the end of 2013.The health check by the EBA 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 did fail, 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.There are 14 banks that still need to raise more capital. Four are Italian, two Greek, two Belgian and two more 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.
Analysis: Robert Peston, Economics editor, BBC NewsAnalysis: Robert Peston, Economics editor, BBC News
Certainly this was a much more realistic evaluation than previous exercises.Certainly this was a much more realistic evaluation than previous exercises.
But, again, that is not the whole story.But, again, that is not the whole story.
If this exercise to rehabilitate banks had been carried out two years ago, the impact on the recovery of the eurozone might well have been quite powerful.If this exercise to rehabilitate banks had been carried out two years ago, the impact on the recovery of the eurozone might well have been quite powerful.
But today the eurozone's weakness is as much about the demand for credit as the supplyBut today the eurozone's weakness is as much about the demand for credit as the supply
It is all very well putting banks in a position to lend, but if households and businesses are reluctant to borrow, because their confidence in the future of the eurozone is shattered, then - like the proverbial gee-gee led to water - they won't drink (or borrow).It is all very well putting banks in a position to lend, but if households and businesses are reluctant to borrow, because their confidence in the future of the eurozone is shattered, then - like the proverbial gee-gee led to water - they won't drink (or borrow).
Read Robert's blog in fullRead Robert's blog in full