European officials appeared to be at odds on Thursday over whether to release stress test results earlier than planned and reveal banks' exposure to sovereign debt, in a last-minute struggle over how to regain confidence in the financial sector.
The confusion over the timing adds to weeks of uncertainty and rumors about the tests, seen as key to show how banks would cope with another economic slump and losses on government debt after the Greek crisis raised fears of a euro zone crunch.
French and German supervisors are among those pushing to bring forward the release of the results of a health check of 91 banks to give European markets a chance to react rather than leave the first judgment to U.S. markets, four people familiar with the discussions said.
But Britain's financial regulator said it still expected to publish results after 1600 GMT (12 noon EDT) on Friday -- in line with the original timetable -- and the Bank of Spain said it would present its findings at 1630 GMT on Friday as planned.
It would be reasonable to bring it forward to the morning, one of the informed people said. A decision is due in a conference call of European finance ministry officials scheduled for later on Thursday, the people said.
The officials will also discuss whether to persuade banks to give a detailed breakdown of their government debt holdings, which would be a show of transparency that investors and the International Monetary Fund (IMF) have asked for.
A document, obtained by Reuters, by the Committee of European Banking Supervisors, the group presiding over the stress test, includes a template for the release of government bond holdings but leaves open whether publication is mandatory.
With few details available about the terms of the test and early divisions among the 27 European Union members over how much information to divulge, investors have worried the assessments would not be tough or transparent enough.
It has to be the right sort of test, it is absolutely crucial, said Ted Scott , director of UK strategy at fund management house F&C. If the criteria are insufficiently rigorous it will undermine confidence rather than increase it.
It is a promising first step, but they have only done it under severe pressure from the outside world, he said. It is necessary but not sufficient to restore confidence.
The 91 banks participating have been asked to estimate if their Tier 1 capital will stay above 6 percent under two adverse scenarios assuming a double-dip recession in the first case and heavy losses on government bonds on top of that in the second.
Capital is held by banks to protect deposits and Tier 1 is a standard measure that includes common stock and retained earnings.
Officials and bankers from several countries including Germany, France, Greece and Belgium have said their lenders should pass, raising concerns the assessment is too lenient to reassure the markets.
Some investors have therefore argued that transparency, including a full list of government bond holdings, was even more important because it would allow analysts to run their own stress tests with tougher assumptions.
Major listed banks, which face constant investor scrutiny, are expected to pass, but the tests may show the worst problems lie with smaller players such as Spanish cajas and German landesbanks, which are mainly unlisted.
(Additional reporting by Steve Slater, Cecilia Valente and Boris Groendahl, writing by Boris Groendahl, editing by Mike Peacock)