As the European sovereign debt crisis intensified, it increased the likelihood of a systemic financial crisis. The solvency of European banks was questioned, given their large holdings of debt of affected countries. At the end of 2009, European bank holdings of Portuguese, Spanish and Greek bonds totalled EUR1,2 trillion, with a high concentration of holdings by German and French banks 1.
Naturally, long-term lenders to banks need assurance as to the adequacy of the banks’ capital position and this means not only that the banks’ capital has had to be increased – and  2  BIS Review 157/2010  this has been done on a very large scale over the past two years – but that investors need more and better information about the portfolio of the banks.