The European Central Bank has defended the design of a stress test for 128 euro zone lenders, after Andreas Treichl, head of Erste Group Bank, vowed to fight its "political" bias against eastern Europe.

The ECB said the stress test “reflects a narrative which consistently portrays the main prevailing financial stability risks identified” by the European Systemic Risk Board, which proposed the adverse scenario, according to an internal ECB document.

Mr Treichl said the stress test favoured banks in Italy and other southern nations over those in healthier economies in eastern Europe, where Erste has a big presence. – (Bloomberg)