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Greek banks are optimistic for the upcoming stress test, reported the economic edition Imerisia. Although Moody's cut the credit rating of the six largest financial institutions in the country Greek bankers believe they can meet the new capital adequacy requirements set by the European Banking Authority.

The organisation is the successor of the Committee of European Banking Supervisors, which failed in its attempt last year to convince capital markets that the European banking system is solid and stable. The Committee completely lost all the confidence having had to find financial support for two Irish banks, although they had passed the test of the supervising body. Seven out of 91 banks in the euro area did not pass the test in 2010. One of them was the Agricultural Bank of Greece. Piraeus passed the test with a desirable minimum of 6 per cent.

At the end of this week the European Banking Authority will hold a special teleconference to discuss the issues related with the conditions of the stress test and to collect more detailed data on the state of European banks. Currently, it is known that the test will consider two scenarios. The first is basic and the other is pessimistic.

The pessimistic one includes contraction of the euro area economy by 0.5% in 2011 and another 0.2% in 2012 and collapse of the real estate market. It also includes decline in the value of European share of around 15% and 75 points increase in the cost of government borrowing to the countries in the monetary union. And increased cost of interbank lending by 125 points and overall reduction in world demand the main character being the USA, and weakening of the the dollar by 4%.

According to the Greek economic analysts, this stress test is more stringent because the requirements of the levels of banks’ capital adequacy will be higher than the seven per cent of Basel-III. This view is not shared by the Financial Times experts who believe that the bar for measuring the strength of 88 European banks this year is low.

The main criticism is that the fall in European shares on capital markets this time has been reduced to 15% instead of the 20% known from the stress test administered in the middle of 2010. Also, the increase in commodity prices is not included which already can have a serious impact on market movement and the economic contraction of the union is also reduced.

In response to the comments of the Financial Times, the head of the European Banking Authority Andrea Enria made a statement quoted by AFP, stating that this year's stress tests are severe and deeper than last year’s. Enrie said that we need to look at the whole package of what is in the new stress test, not just to make a few remarks out of context.

No one knows how much this statement can convince international investors in the stability of the European banking system. The same publication quoted a senior banking analyst in London who said concerning the stress tests that nothing happened so far to change the opinion of markets for this process. The last time it was fun. Why it should be different now?