The Euro gained against most major currencies today after news that the 25 billion Euro shortfall from 25 Eurozone banks had been made up by most of the banks. Eight of the 25 banks continued to show a shortfall 6.35 billion Euros, with half of those banks based in Italy.
The ECB originally identified 13 banks with capital gaps in their yearlong bank audit. Nevertheless, footnotes of the report explained that of the 13 banks, five of them — two in Slovenia, two in Greece and the Belgian Bank, Dexia — did not need to raise any additional funds than what they had already raised due to their balance sheets being adequately reduced.
Of the eight banks that continued to show a shortfall, four of them were from Italy, with Banca Monte dei Paschi di Siena SpA being the bank with the largest shortfall. The Italian bank was told to raise an additional 2.11 billion Euros and has hired Citigroup and UBS AG to advise them on their options.
No banks from Germany, Spain or France were asked to raise additional funds. The results from the stress tests turned out better than the forex market had anticipated which in turn fueled the rally in the Euro today. Traders will be looking to the release of German Ifo Business Climate survey (104.6) later today for indications that the German economic outlook is improving.