Euroland Cash Call: $37B of Fresh Equity Needed at 20 Banks Following Stress Tests

The balance sheets of European banks have come under increasing scrutiny following public release of ECB stress tests of the largest Eurozone financial houses. As much as $37B in fresh equity may be required between 20 EU banks.

Stress tests of banks have been conducted in concert with the "Shock and Awe" plan to secure confidence in the Euro, which has been under initial stages of implementation in recent weeks. Interbank lending rates have risen sharply in recent weeks and as many as 170 banks are estimated to be having difficulty accessing interbank markets.

Spain's 'cajas', or savings banks, and other troubled lends on the continent's periphery (Portugal, Greece, Ireland) are sucking confidence out of the marketplace, forcing the ECB to provide €111B six-day money to 78 banks last week to keep Libor rates from rising too quickly.

Source: FT.com/lex

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