The comments from Jochen Sanio, head of BaFin, highlight the unhappiness in Germany at the EBA’s approach to the tests, and cast doubt on the backing for the new authority from the financial sector in Europe’s largest economy. The stress tests are intended to underline the robustness of Europe’s banks by improving on last year’s much criticised exercise, failed by only seven of 91 banks months before Ireland’s banking system imploded.

But Germany has criticised the EBA for excluding from this year’s tests certain forms of hybrid capital that are often used by the country’s banks. The decision, intended to improve the consistency of results across Europe, forced two German Landesbanken to scramble to secure promises from their owners to convert some hybrid capital into better quality equity capital.

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