The European Union’s banking stress tests cover 91 banks in 20 countries.
Seven of those financials are Nordic — but none of them are Norwegian.
Norway is of course, not a member of the EU, but it keeps close ties, and seems to have had the option to participate in the tests — if it wanted. Only, it really didn’t. The head of the Norwegian FSA, a Mr Bjørn Skogstad Aamo is quoted in Thursday’s Dagens Naeringsliv saying there was “no national need” for its banks to participate in the stress tests (caveat Google Translate).
Sums up Citigroup:
There are two important reasons why Norwegian banks are not interesting in terms of such tests at this stage, according to Mr Aamo:
1) spill-over effects from a Norwegian bank crisis to the rest of Europe would be limited as only one Norwegian bank operates outside the country and its market share abroad is limited.
2) Norwegian banks have limited exposure to the troubled European countries (Portugal, Ireland, Italy, Greece and Spain). Lending to these countries only accounts for 1% of Norwegian banks’ balance sheet, while other banks have around 10 to 20 times as large an exposure.
Although Norwegian banks are not part of the European stress tests, the Norwegian FSA performs such tests itself. In the latest (from May), the resilience of Norwegian banks was tested in an economic environment assuming that GDP growth was 7%- points lower than in the Norges Bank’s main scenario.
The other (EU) countries whose banks aren’t included in the stress test exercise are:
- Bulgaria
- Czech Republic
- Estonia
- Latvia
- Lithuania
- Romania
- Slovakia
Presumably they don’t count as “major cross-border banking groups” under CEBS methodology.
Related links:
Norway – BUY – FT Alphaville
The Stress Test Guide – FT Alphaville
CEE’s western exposure – FT Alphaville, 2009
The Nordic banking crisis from an international perspective - IMF