Bank stress tests should address government debt holdings: Weidmann; sovereign debt holdings should over the medium term be treated the same way as corporate bonds, which are not treated as a risk-free asset

Bank stress tests should address government debt holdings: Weidmann

3:50pm EDT

DARMSTADT, Germany (Reuters) – The upcoming European bank stress tests should address banks’ holdings of sovereign debt, European Central Bank Governing Council member Jens Weidmann said on Wednesday. The ECB will run a series of checks on banks’ balance sheets before it will take up responsibility as the euro zone’s banking supervisor late next year and Weidmann said the tests would be a success if afterwards trust returned to the sector. “And this should also include for example that the stress test also stresses government bonds, which is currently under discussion,” Weidmann said without providing further detail for how exactly such holdings should be looked at. Weidmann, also the head of Germany’s Bundesbank, said in a speech banks’ sovereign debt holdings should over the medium term be treated the same way as corporate bonds, which are not treated as a risk-free asset. Currently Basel-III bank rules treat sovereign debt as a risk-free asset, which means that banks do not have to allocate extra capital to compensate for a potential loss in value.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: