REFILE-UPDATE 3-German listed banks, landesbanks to pass test

* German private sector banks seen passing test

* German public banks association sees banks passing test

* Problems among any banks would be clear before Friday

* Top bankers to meet ECB’s Trichet on Wednesday

(Refiles to add dropped word in paragraph 3)

FRANKFURT, July 20 (BestGrowthStock) – Germany’s biggest banks are
on track to pass a European test of their financial health,
sources close to the banks said on Tuesday, after it emerged
that nationalised Hypo Real Estate was likely to fail.

They were speaking the day before Europe’s top bankers are
due to meet regulators in Frankfurt and before the results of
pan-European stress tests on 91 lenders are published on Friday.

Germany’s biggest listed banks Deutsche Bank (DBKGn.DE: ),
Commerzbank (CBKGn.DE: ) and Deutsche Postbank (DPBGn.DE: ) are not
seen to be in any danger of needing to recapitalise their
balance sheets to bolster their resilience to external shocks,
the sources said.

“We have passed the test,” one source close to Postbank
said. Sources at the other banks had similar comments, but all
three lenders declined to say anything.

About 40 bankers and regulators, including European Central
Bank President Jean-Claude Trichet, Deutsche Bank Chief
Executive Josef Ackermann and UniCredit (CRDI.MI: ) CEO Alessandro
Profumo will meet on Wednesday and the impact of the tests will
be one of the topics discussed, people familiar with the
situation said.

Europe is testing how banks across 20 countries would cope
with another economic downturn and losses on sovereign debt
holdings, in an effort to restore confidence after the Greek
crisis hit markets and sparked fears the eurozone could unravel.

Major listed banks are expected to pass, but analysts fear
the stress test results could show that Europe’s biggest
problems lie with smaller players such as Spanish cajas and
German landesbanks, which are mainly unlisted.

On Monday, a source familiar with the matter said Hypo Real
Estate, which is already being recapitalised, would likely fail
the test, making it the first known failure. [ID:nLDE66I20V]

A source familiar with the matter said Hypo Real Estate,
which is already being propped up with 100 billion euros ($130
billion) of public funds and is being restructured, would likely
fail, making it the first known failure. [ID:nLDE66I20V]

Public sector landesbanks are still expected to pass the
test, said the German Association of Public Sector Banks, which
represents the landesbanks as well as regional development banks
owned by the federal and state governments.

“If any of them should really have obvious difficulties,
they would not wait until Friday,” its president, Christian
Brand, told Reuters. “They would make sure to go public with a
clear concept, ideally with a commitment to raise capital.”

Seven landesbanks, including NordLB [NDLG.UL], WestLB
[WDLG.UL], LBBW [LBBW.UL], BayernLB [BAYLB.UL] and HSH [HSH.UL],
Landesbank Hessen Thueringen [HLAG.UL], and Landesbank Berlin
(BEBG.DE: ), were assessed in the stress tests.

The banks were hit hard during the credit crisis and
analysts fear the results will show that the landesbanks’
problems are not over after several bad investments led to
multi-billion euro bailouts.

The big unknowns that could be exposed in the stress tests
are their holdings of peripheral eurozone sovereign debt and
parts of their loan books which could turn bad under the
assumption of a severe economic crisis.

The recapitalisation of some lenders at the height of the
credit crisis makes them less vulnerable to failing the tests,
but analysts at Credit Suisse estimate the landesbanks will
require 31 billion euros ($40.2 billion) of additional funding.

Investing Research

(Additional reporting by Sakari Suoinen in Vienna; Angelika
Gruber, Alexander Huebner, Philipp Halstrick and Edward Taylor
in Frankfurt; Nigel Tutt in Milan; Editing by Lin Noueihed)

REFILE-UPDATE 3-German listed banks, landesbanks to pass test