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Is history about to repeat itself? Check this article out from telegraph.co.uk. :-

EBA : Bank Crisis? What bank Crisis?

Europe’s top banking regulator has designed a stress test that the region's lenders simply can't fail.

The watered-down, stress-free stress tests come at a time of market chaos and amid investor worries over the strength of the European banking industry.

Stress tests are designed to discover how well banks would cope with a recession. Traditionally, those found wanting can be forced by regulators to build up their financial buffers.

But the European Banking Authority believes banks in Europe are now in robust health and have more than enough capital.

As a result, fewer banks will be tested this year and there will be no pass or fail threshold.

This is despite that fact that investors have recently expressed concern that banks’ capital buffers may be insufficient and questioned their future profitability. These worries have translated into falling bond and share prices.

When the EBA previously tested banks in 2014, it failed 25 of the 130 banks that took part.

Only 51 banks will take part in this year’s test with many smaller banks exempt.

Stress tests are usually conducted on the biggest banks in the country in which they are based. However, the eurozone is being treated as if it is only one country. That means than banks from countries such as Portugal, where lenders have failed in recent years, are not taking part in this year’s EBA test.

Only one Greek bank will take part, and none from Cyprus will be tested.

Officials at the EBA argue that those banks are not important on a eurozone-wide basis, and so are only of interest to national regulators.

The big four British banks – Lloyds, RBS, Barclays and HSBC – will all be involved.

The test will consider how banks would cope with a crash in commodities prices, a slowdown in emerging market economies and a recession in Europe.

The European economic forecasts will consider a fictional scenario where GDP falls by 1.2pc in 2016 and 1.3pc in 2017 before slowly recovering with growth of 0.7pc in 2018. The EBA believes these tests are suitably tough, as they are roughly in line with the stresses imposed on US and UK banks by their regulators.

However, the tests were designed in 2015 and so do not take into account the fact that some of these events have already occurred, including an Asian economic slowdown and a fall in commodities prices.

Read the full article at telegraph.co.uk