Just seven European banks failed a health check and were ordered to raise their capital by 3.5 billion euros ($4.5 billion), confirming fears the continent's long-awaited stress test was too soft.
Following are selected comments from media around Europe on Saturday.
THE TIMES (BRITAIN)
Anyone expecting a horror show in yesterday's Europe-wide stress-testing exercise hasn't been paying attention. The aim of the process all along has been to calm market jitters, not aggravate them ... The danger, however, is that the results are so benign that they have no credibility at all ... But the exercise will do nothing to equip Europe's weaker banks to face either a sudden financial hurricane or a prolonged economic winter. Fingers crossed, for all our sakes, that they encounter neither.
NRC HANDELSBLAD (NETHERLANDS)
Does this take away all mistrust? Not completely. Contrary to the U.S. stress test in the spring of 2009 at the 19 most important systemic banks not all details were made public this year in Europe about the financial and economic adverse scenarios for the systemic banks. The most important parameters are now known. But because of the obscurity beforehand much doubt has been created in the run up to the test. The impression could now remain that some banks passed because the stress test perhaps was not severe enough.
IL SOLE 24 ORE (ITALY) What was at stake, rather more than the solidity of the institutions, was the credibility of the central banks. Did anyone really think that at 6.00 p.m. on Friday July 23 they would uncover an enormous shortfall in bank capital reserves in the event of a worsening in the economic situation or fears about whether public sector debt could be refinanced? The 'market' would have abandoned any confidence it had in the governors: 'where were they before?', they would have said. 'What were they telling us over all these months?' The risks would have been blown up enormously. So the outcome of this operation is modest.
BERLINER ZEITUNG (GERMANY)
Naturally, what emerges from a stress test is only what one considers possible beforehand. To evaluate the results one must therefore know what the whole purpose of the test is. In the U.S. last year, the goal was to recapitalize the big banks in order to avoid a credit crunch and get toxic assets out of the way. In Europe it is about showing the world that a full-blown euro crisis would not topple the local banks.
FINANCIAL TIMES LEX COLUMN (BRITAIN)
Almost all must have prizes. That was the result on Friday of a secretive, rushed, and rather unconvincing stress test exercise on 91 European banks ... By testing only the banks' trading books, the CEBS failed to address the European banking sector's Achilles heel -- its exposure to sovereign debt. The regulators assumed that no European sovereign would default, which is either brave or foolhardy in light of the eurozone debt crisis ... Uncertainty about the health of Europe's banking sector has been a significant contributor to recent market volatility. The stress test results are unlikely to change that.
IL MESSAGERO (ITALY)
Our banking system has always been commercial, in the sense of bringing individuals and companies together in giving and receiving money. In the years before the crisis, this business model caused cries of cultural backwardness and inability to evolve toward the kind of financial engineering hidden behind sophisticated English terms (futures, options, swaps). It has been shown to be a winning model and thanks to Passera, Profumo, Mussaru, Saviotti, Italy is in a position to compete in Europe. With head held high.
THE DAILY TELEGRAPH (BRITAIN)
To make matters worse not only were the banks allowed to include even the most spurious assets when calculating their tier one capital, but the definition of stress didn't actually appear that stressful, with a set of assumptions in the worse case scenario that appeared to be far from the worse many in the market have feared in recent months. The scenario dreamt up by the Eurocrats did not even include a sovereign failure ... On Monday we will discover whether the markets have been convinced that the tests were little more than a PR exercise.
EL MUNDO (SPAIN)
It could be said that the only country which has dared to show the results of all of its banks and savings banks has been Spain, and that should bring positive short-term consequences, including restoring investor confidence and improving conditions for external finance.
Spain has put 95 percent of its financial system through (the test) while other countries have only put 50 percent through, leaving out those small institutions which could be problematic.
DE TELEGRAAF (NETHERLANDS)
The numbers look good. But the stress test's positive outcome is not a guarantee for the future. If the present crisis has taught us anything it is that adversity can come sudden and fast, unexpectedly big and from areas not anticipated beforehand.
DIE WELT (GERMANY)
The low number of failures may calm investors in the short-term, but it will hardly dispel doubts over Europe's banks in the long run.
(The) bank stress test...under the worst possible conditions generally showed that the Greek banking system is strong enough to fully meet its obligations, disappointing all those who, either with a light heart or with a speculative intention, leaked rumors about difficulties or even a possible default.
LE MONDE (FRANCE)
It remains to be seen how these results will be interpreted by ... markets and whether they judge the degree of transparency set by the Europeans as enough. Already burned by the crisis and lies on the real losses in the financial sector, the markets only believe what they can see. They are demanding complete and detailed information to make up their own opinion.
Beyond this, one should look at the way the banks that failed or just about passed will be recapitalized. Most of these are in countries suffering from the crisis that are carrying out harsh austerity measures, such as Spain and Greece. For them, it could be an opportunity to tap the Financial Stability Fund ... one way, this time, to test the Union.