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Greek Agricultural Bank "failed" the stress-tests conducted to assess to what extent the eurozone banking system can withstand the pressure of the economic crisis. According to the results provided by the Committee of European Banking Supervisors (CEBS) ATEbank lacks 242 million euros in capital to withstand the extreme conditions set in the test.

Out of 91 European banks from 16 countries undergoing the test, only seven have not done well. Besides the Greek Agricultural Bank the test did not pass also the five Spanish financial institutions Diada, Cajasur, Espiga, Unnim, Banca Civica, as well as the German Hypo Real Estate.

The rest of the Greek banks have passed successfully having in mind that the capitalizing of the state Postbank is 10.1 percent, while for the private Alpha it is - 8,22%, Eurobank - 8,17%, National Bank of Greece - 7.4%, as well as Piraeus Bank - 6%. The aim of the stress test was to dispel the doubts about the consistency of the European financial institutions and to provide a current insight into their real codition. The minimum for passing the critical test has been set at 6%, provided that the country's GDP falls by 3% in 2011 and 2012, while stock prices fell by twenty percent annually.

Best among the Greek banks clearly did the state Postbank. Piraeus Bank on the other hand, which last week openly expressed its intention to buy the successful Postbank and the failed agricultural bank has only reached the minimum of six percent. And this is after having received aid worth 750 million from the 28 billions Fund for financial support of the banking system in the beginning of 2009.

The other conditions that underlie in the stress test include the reduced value of government bonds for each country (without providing for the risk of bankruptcy of the respective country), increasing the risk of delay in the repayment of debts to creditors of the 16 participating countries, as well as increase of the price of short-term interbank loans to 1,25 points.

The immediate reaction of the President of the Bank of Greece Georgios Provopoulos was that the Agricultural Bank will proceed to a capital increase. Greek Finance Minister George Papakonstantinou said in a press statement that he is pleased with the results and the local banking system can withstand much more severe economic conditions than the present. He stresses that with the recapitalization program and the Fiscal Stability Fund with a budget of 10 billion euros, created with the help of the International Monetary Fund have been set up the appropriate mechanisms to support the banking system in the country. In his statement the Finance Minister did not comment on the failure of ATEbank in the stress test, but asked the Greek banks to increase their capital adequacy and to encourage the restructuring of the banking system in the country.

Markets did not react particularly positively to the stress test conducted and the euro dropped in price immediately after their announcement. According to international economic analysts, this test was quite easy and does not give a clear picture of the problems of the banking sector in the eurozone. "I see nothing stressing in this test," said the chief strategist at Cantor Steven Pop quoted by ABC news and explained: "It is like sending the banks on a holiday weekend to get to know each other."