European Credit Card Issuers' Stress Test Results Due in July
Currency traders and investors cheered the announcement that European Union would publish results of stress tests conducted on its largest banks. According to an Associated Press report, European President Herman Van Rompuy used the announcement to further assure markets still reeling from the Greek financial bailout earlier in the year. Speculators anticipate a strong report card in July could translate to recovered prices for the Euro against the U.S. Dollar.

When U.S. regulators published the results of their own financial industry stress test in 2009, credit card issuers pointed at the results to justify sudden retractions of consumer credit lines. Liquidity requirements forced portfolio managers to reserve billions of dollars in cash instead of floating it on the credit market. Credit card issuers like Citi, Chase, and Bank of America instituted "follow me down" policies that moved some cardholders' limits to just above their balances.

Although some European officials have reported resistance from larger banks wanting to avoid similar public backlash, economists cited in the report note that European banks could have some surprisingly optimistic results. UK-based Barclays Bank and HSBC both own significant American credit card operations, while Spanish Grupo Santander has grown into one of the most powerful banks in the world through its recent American retail banking acquisitions.

About the Author


Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.