David Prosser: Still waiting for the banking regulator to do its job

Outlook On the possibility of that banking crisis, by the way, one can only marvel at the weird and wonderful way the European Banking Authority operates. Having made a pig's ear of July's stress-testing of Europe's banks, the EBA is working on the detail of its second attempt at assessing what the impact of the eurozone's woes might be on the financial sector. All the indications so far are that it is going to mess it up all over again.

The delay is certainly unhelpful. Though the EBA has apparently held discussions about the next round of tests, it hasn't communicated a single word of its thinking to the outside world. Naturally, plenty of others have sought to fill the vacuum, creating even more uncertainty around the banks. Yesterday's estimates on Royal Bank of Scotland's needs, for example, ranged from zero to £19bn.

We are now, however, beginning to get a picture of what the tests might entail. The good news is that, unlike July's exercise, it looks as if banks will be required to hit capital targets having marked down the sovereign debt they hold on both their trading books and their banking books (last time, the latter was excluded). That seems more sensible.

Less happily, the EBA seems inclined to let the banks make their calculations with no reference to the economic setbacks that were assumed in the July exercise. Never mind that the mark downs of debt the EBA does require are inextricably linked to such setbacks, the banks may be able to exclude them this time. Bizarre.