Czech banks should be able to hold up even if Europe were to go into a serious recession, under the findings of a recent bout of stress tests carried out by the Czech central bank. It estimates that the banks’ capital adequacy would likely remain near the prescribed 8 percent level, even if Czech lenders had to write off a third of their exposure to the mother companies. Foreign ownership, and the health of those owners in Western Europe, is a major worry for Czech economists. However Czech banks tend to be able to boast of high deposit bases, and high capital adequacy levels.
