As expected, the stress tests themselves are widely derided, but then the surprise would have been that they were credible and satisfying for the market...
Fixed Income Credit Analysis
The head of the EBA (European Banking Authority) agrees that a €2.5 billion additional capital requirement for European banks is too low an estimate. The EBA will be able to put pressure on regulators to encourage “near misses” to raise additional equity, but otherwise it will be left to the banks themselves. Note that the majority of banks will be increasing their equity levels anyway (and by many multiples of €2.5 billion) as required by Basel III / SIFI surcharges etc. The EBA tests merely accelerate the speed of capital raising or consolidation for a handful of marginal banks.
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Source: IFAWorld – Schroders