German watchdog raps EU stress tests

Germany's financial regulator has taken a swipe at European Union rule makers over the way they ignored Basel III bank capital definitions when they designed new pan-European bank stress tests.

BaFin's president Jochen Sanio criticised the European Banking Authority for setting its own definition for capital benchmarks that took no account of internationally agreed Basel terms. "Without any legal authority, not to mention legitimacy, the EBA knitted together a new definition of equity capital ... and no one wants to guess at the consequences," he said. "How this decision came to pass is hidden from the public view."