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Slovak banks passed stress tests

BANKS in Slovakia passed the latest stress tests that the National Bank of Slovakia (NBS) carried out in the second half of 2010.

BANKS in Slovakia passed the latest stress tests that the National Bank of Slovakia (NBS) carried out in the second half of 2010.

“In principle, the stress tests that we conducted confirmed the fact that the Slovak banking sector is stable,” NBS supervision department head Vladimír Dvořáček told a press conference on April 18, as quoted by the SITA newswire.

In the macro-stress testing of Slovakia’s financial sector, the central bank simulated two scenarios.

The first foresaw a negative development caused by growing doubts about the sustainability of the public finances of selected eurozone members, which would lead to increased uncertainty on financial markets and a drop in foreign demand as a result of declining economic growth.

The second scenario was based on rising inflation resulting from excessive growth in commodity prices and loose monetary policy by the Federal Reserve in the United States.

The Slovak banking sector remained stable overall under both scenarios, but the potential negative impact of the second was judged to be stronger, said Dvořáček.

According to the results of the tests, if the first scenario actually took place four banks would find themselves losing money in 2011 and 2012, while in the event of the second scenario six banks would report losses during the same period, SITA reported.

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