Halister News

(Bloomberg) -- If Friday’s stress tests show a drag from lower net interest income that could spur speculation the ECB will refrain from further cuts in the deposit rate or prolonging QE, ScotiaBank analysts Alan Clarke and Frederic Pretet write in client note.

• Such an outcome could push central banks to look for alternative options such as adopting a two-tiered system
• The ECB has frequently repeated that, on average, negative yields have been supportive for banks’ profitability
• NOTE: EUR underpricing any positive outcome for Italy’s banks, MS says