EU stress tests 'won't improve lending'

Date: 29th July 2010

Businesses are not likely to see improvements in lending following the EU's stress tests of banks, it has been claimed.

Alan Clarke, UK economist at BNP Paribas, said that banks in Britain are able to withstand certain market shocks.

However, he warned that this does not mean that they will be open to lending to businesses.

The comments come after the Committee of European Banking Supervisors conducted tests to assess whether banks can withstand sovereign risk shocks.

All four UK banks that were included in the tests passed.

Mr Clarke said that the results could improve market concerns about Europe and the eurozone.

"Will it compel the banks to lend more? Probably not," he added.

"House prices are falling again - so should banks be in any rush to go out and lend to business when there is less chance of them getting it back? Well, no - the bank tests don't really change that at all."

Posted by Jacob Williams