UPDATE 1-German regulators brush off stress test concerns

* EU supervisors to press German banks on sovereign risk -FT

* German regulators say bank sovereign disclosure voluntary

* Deutsche Bank shares fall 1 pct, Postbank, Commerzbank up

(Adds Bundesbank, Bafin comment, background, share price)

FRANKFURT, July 26 (BestGrowthStock) – German regulators brushed off
criticism on Monday that German banks’ failure to detail their
sovereign risk exposures as part of European stress tests had
raised concern over transparency in Europe’s largest economy.

Many analysts have criticised the tests of 91 European banks
as too soft, but have welcomed the disclosure of data that could
help investors make up their own mind about banks’ exposure to
government debt in weaker southern European economies.

Only seven banks — six German ones and Greece’s ATEbank —
did not publish their sovereign debt exposure on Friday, though
some have since released the data or promised to do so.

The Committee of European Banking Supervisors (CEBS), which
oversaw stress tests, said disclosure was key to the exercise,
which was aimed at restoring confidence in the banking sector.

“CEBS has strongly encouraged the participating banks and
their supervisory authorities to disclose detailed information
on their exposures to EU sovereign debt,” it said in response to
a question about German disclosure. “The disclosure of this
information is considered as an essential part of the exercise.”

The Financial Times reported earlier that European
regulators would probe several German banks, including Deutsche
Bank (DBKGn.DE: ) and Hypo Real Estate [HRXGe.UL], about why they
did not publish their sovereign holdings with test results
released on Friday.[nLDE66O078]

“From looking at the data, it appears Spain has tried hard
to provide appropriately harsh stresses on the loan book, and
Ireland too,” Morgan Stanley said in a note on Monday.

“However, some countries and some types of banks look less
harsh (Italy and Germany stand out for us).”

DISCLOSURE VOLUNTARY

But German bank regulators played down the prospects of a
clash with EU counterparts on the issue, saying disclosure of
lenders’ sovereign debt exposure was not compulsory.

“Naturally, as supervisors, we support transparency,” a
spokeswoman for German regulator BaFin said. “Participation in
the tests was voluntary and the decision to publish the results,
including sovereign exposure, was also voluntary.”

A Bundesbank spokesman echoed that view.

The Bundesbank and BaFin, which share responsibility for
banking supervision in Germany, have no legal means to force
lenders to publish the results, but some commentators said the
decision by top German banks to hold back was ill-considered.

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Click on [ID nLDE66P0MV] for Reuters Breakingviews column:
Deutsche Bank’s disclosure is ham-fisted

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Deutsche Bank declined to comment on why it had not
disclosed its sovereign exposure but indicated that it may give
more details when it reports second-quarter results on Tuesday.

Contacted by Reuters, Postbank gave more details. Exposure
to Portugal was 0.05 billion euros ($64.6 million) on July 20, a
spokesman said. Exposure to Italy was 4.6 billion euros, while
the figures for Ireland, Greece and Spain were 0.3 billion
euros, 1.3 billion and 1.2 billion, respectively.

The other banks that did not disclose sovereign holdings —
DZ Bank (DGBGg.F: ), WGZ Bank (WSTGgb.F: ) and Landesbank Berlin
(BEBG.DE: ), which passed the test, and Hypo, the only German bank
to fail — were not available for comment.

The market appeared to brush aside concerns with Postbank
shares 2 percent and Commerzbank 1.1 percent higher at 1200 GMT.

Deutsche Bank shares were 1 percent lower on concerns that
the lender may have to accelerate its takeover of Postbank, of
which it already owns almost 30 percent.[ID:nLDE6671VH]

Stock Market Today

(Reporting by Edward Taylor, Jonathan Gould and Philipp
Halstrick in Frankfurt and Steve Slater in London, Editing by
Lin Noueihed)

UPDATE 1-German regulators brush off stress test concerns