Europe’s banks could survive a drastic economic downturn, stress test shows

FRANKFURT, Germany (AP) — The European Central Bank says the banking sector could withstand a severe economic downturn without depleting their financial buffers against losses. A survey of 98 large and medium-sized banks showed Friday that even in the most adverse scenario, banks would still have enough capital to cover losses and then some. Banks are crucial to the European economy because companies get most of their financing from them, instead of from financial markets — the opposite of the situation in the United States. Scrutiny of bank finances has grown after the failure of three U.S. banks amid rising interest rates that led to losses on investments and mass withdrawal of deposits.