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Bank tests 'not assuming default'

EU summit - Greece top of agenda again
EU summit - Greece top of agenda again

The Taoiseach has said that he will be raising the question of a reduction on the interest rate that Ireland has to pay on its bail-out loan at tonight's dinner of EU leaders in Brussels.

Asked by journalists if the issue could be resolved at the summit, Mr Kenny said: 'To be honest, I don't expect so.'

He said that he had raised the question of the rate this afternoon with leaders who are also members of the centre-right European People's Party.

Asked when a deal might be done, Mr Kenny said: 'I never set a deadline on this issue and will not now.'

The Taoiseach said that EPP leaders were 'really, really concerned' about Greece. He described the current circumstances as 'an absolutely critical situation'.

European leaders go into the crunch summit tonight facing increasing pressure for a breakthrough on Greece amid fears its debt crisis will wreak havoc across Europe and beyond.

Bank tests 'not assuming default'

The EU's banking regulator says that, while it is closely following the euro zone debt crisis, its stress tests on the financial sector will not assume a potential default by Greece.

'The stress test results will allow an assessment of potential systemic impacts stemming from the current market conditions on sovereign risk and banks' cost of funding,' the London-based EBA said in a statement.

The EBA added that 'no default is assumed' in the tests, which are designed to examine the banking sector's ability to weather another global financial crisis.

The EBA's tests are designed to combat criticism over last year's round which found that just seven out of 91 European banks were vulnerable to economic stress. Of the 91 European banks tested in 2010, five in Spain, one in Germany and one in Greece - failed to pass.

Two Irish banks, AIB and Bank of Ireland, passed the tests but subsequently had to be nationalised.

The EBA replaces the Committee of European Banking Supervisors (CEBS), which carried out the previous stress tests that were announced in July 2010.

It is co-ordinating the new tests alongside national supervisory authorities, the European Systemic Risk Board (ESRB), the European Central Bank and the European Commission. The results are scheduled for publication on a bank-by-bank basis around mid-July.