Back-to-back stress tests for European banks mean that a difficult June could turn into a painful July, especially for any of them that disappoint regulators on both sides of the Atlantic.
More than 50 European banks are expecting results for their stress tests from regulators Friday. Some have already taken U.S. stress tests, and the majority are expected to meet approval in Europe.
However, the European Union examinations could mark the next step for the weakest among them to be either broken up or bailed out by their sovereign governments. Regardless, the tests are an important yardstick for how well banks have prepared for a crisis. Shareholders will closely watch the results.
It has been a more challenging year for European banks than for their American peers.
U.S. banks got off to a dreary start to 2016 as they took a hit from their exposure to energy companies and flagging commodity prices — though the banks' share prices have since rebounded. European banks are facing a far worse situation, factoring in the pain that's expected ahead as a result of the U.K. Brexit vote. Their test results could run across the board.
"We expect the more highly rated banks will show resilience," Alan Adkins, group credit officer with Fitch Ratings, said in sizing up the European banks.