Question to the HM Treasury:

To ask Her Majesty’s Government what assessment have they made of the failure by nine European banks of the European Central Bank stress test.

The European Central Bank carried out a ‘Comprehensive Assessment’ of the banks which are now under its supervision. This identified 13 banks as needing to increase their aggregate capital by an estimated €9.5 billion.

Of these, four were in Italy (requiring €3.31 billion); two in Greece (€2.69 billion, but EU re-structuring plans means that essentially very little capital needs to be raised by them); two in Slovenia (€0.06 billion); one in Austria (€0.86 billion), Portugal (€1.15 billion), Cyprus (€0.18 billion), Ireland (€0.85 billion) and Belgium (€0.34 billion).

At the same time, the European Banking Authority announced the results of its EU-wide stress test which comprised of a slightly different sample of banks.

A process is in place to help ensure that the banks which failed the stress tests will address their capital shortfalls in a timely way.

• They are required to submit plans to their regulators on how they intend to address their shortfalls in the two weeks after disclosure of the results.

• They will have between six and nine months to address capital shortfalls.

  The Treasury has worked with the Prudential Regulation Authority to examine the risks to the UK and estimate these to be very limited.