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Business Daily: Banks Under Pressure

16/07/2010

Banks Under Pressure

BBC World Service - Business Daily, Banks Under Pressure

How local politicians who ran regional banks in Spain and Germany took the wrong risks.

Banks across the world are coming under scrutiny as never before. In the United States, the financial reform bill has passed through the Senate, which will bring a raft of new restrictions on banks. 

And in Europe, 'stress tests' on 91 banks are to be published in the coming week. In the last few months, Europe has lurched through a sovereign debt crisis which has serious implications for the banks. 

Business Daily has been examining how Europe's banks got into such a mess. Our Business Editor, Robert Peston questions whether the stress tests will uncover the truth about their solvency.

Among the European banks causing the most concern, are regional banks. They include some of the Landesbanken in Germany and some of the cajas or savings banks in Spain.  

A common factor is that they all had local politicians on their decision-making boards. 

Lesley Curwen talked to Professor Javier Andres, an economist from Valencia University, and Dr Werner Marnette in Hamburg, who resigned last year as the economy minister for Schleswig Holstein, over a bail-out for one of the heavily indebted Landesbanken. 

Plus, is envy a good motivator in the workplace? According to chartered psychologist Ben Williams, it can lead employees into destructive behaviour and damage a company's bottom line.

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