MARKET TALK: Nomura Highlights Europe Stress Test Methodology

26th Jul 2010 07:42

0642 GMT [Dow Jones] European stress tests' methodology give rise to questions, says Nomura Research. For example, the estimate of two-year profitability appears to be based on '09 earnings, with a "haircut which flatters investment banks--especially those with disposal gains--such as Barclays (BCS)," says Nomura analyst Jon Peace. Also, sovereign "haircuts" appear to be too severe in countries like Germany, but too light in others such as Greece. "That said, improved disclosure allows us to conduct our own test in this note about sensitivity to sovereign marks and Greek default," Peace says. Rates the pan-european banking sector at bullish. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] (END) Dow Jones Newswires July 26, 2010 02:42 ET (06:42 GMT)