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September eyed for European bank stress tests - sources
January 23, 2013 / 7:03 PM / 5 years ago

September eyed for European bank stress tests - sources

VIENNA/LONDON (Reuters) - The European Central Bank (ECB) and European Banking Authority (EBA) are aiming to carry out a joint stress test on Europe’s major banks in September, sources told Reuters.

The logo of Germany's largest business bank, Deutsche Bank, is seen at the bank's headquarters behind twigs in Frankfurt January 31, 2012. REUTERS/Kai Pfaffenbach

Austria’s FMA markets watchdog said on Wednesday that the EBA plans stress tests this year even as the European Central Bank prepares to take on supervision of top lenders from 2014.

Sources told Reuters that the ECB, which was involved in the background of the last round of EBA stress tests, was set to take a more central role before it assumes supervisory powers over the euro zone’s banks.

“The preference is to have the EBA and ECB run stress tests together, rather than have the reputational damage of having two (different) ones,” said a central bank source.

The tests are “likely to be in September”, he added. Other sources said they also expected the tests in September, though the date has not yet been finalised.

The EBA’s predecessor the Committee of European Banking Supervisors (CEBS) started conducting stress tests on major lenders such as Deutsche Bank (DBKGn.DE), Santander (SAN.MC) and Unicredit (CRDI.MI) in 2010.

But the shortcomings of the probes were laid bare when Ireland’s banking system came close to collapse only four months after being given a clean bill of health.

A woman uses an ATM machine at a Santander bank branch in Madrid October 16, 2012. REUTERS/Susana Vera

“As we said last year, we expect a new round of stress tests in 2013 and discussions are on-going,” an EBA spokeswoman said.

ECB Governing Council member Ewald Nowotny said last month that Europe wanted the ECB and the EBA to conduct coordinated stress tests.

EBA Chairman Andrea Enria has said that a key addition to the next test will be an examination of the quality of assets held by banks to ensure they can absorb losses properly in a crisis and leave taxpayers off the hook.

The discussions between the ECB and EBA partly focus on working out how to measure the quality of banks’ loans.

“There will be a stress test this year from the EBA. That is the current status of the decision,” Financial Markets Authority co-head Helmut Ettl told a news conference on Wednesday, adding details were still under discussion.

He said Austrian lenders Raiffeisen Zentralbank RZB.UL - the unlisted parent of Raiffeisen Bank International (RBIV.VI) -and Erste Group Bank (ERST.VI) would be tested.

Europe agreed a deal last month to give the ECB new powers to supervise euro zone banks from 2014, embarking on the first step in a new phase of closer integration to help underpin the euro.

The EBA monitors banks in all 27 EU member states.

Additional reporting by Edward Taylor and Alexander Huebner in Frankfurt and Huw Jones in London; Editing by John Stonestreet and Mike Nesbit

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