ECB makes progress in preparations for bank audit
The European Central Bank said Monday it is making progress in its preparations for an audit of eurozone banks, aimed at boosting confidence in the sector after long years of crisis.
"Preparations for the stress test are well underway and we are confident that, in close coordination with the EBA (European Banking Authority), the outcome will be transparent and credible, boosting the European banking sector," ECB vice president Vitor Constancio told a news conference.
"The ECB and the participating national competent authorities responsible for conducting banking supervision in the euro area have made significant progress in the preparation for, and the implementation of, the comprehensive assessment," the central bank said.
In a move to prevent restore confidence in banks following the euro area's long and debilitating debt crisis from happening again, authorities are planning a Europe-wide banking union with a single supervisory body under the umbrella of the ECB.
The in-depth audit will comprise an asset quality review (AQR), plus so-called "stress tests" to asses the risks that banks are running.
The ECB is currently finalising the methodology for the asset quality review, which will be released in the course of the first quarter of 2014.
On Friday, the European Banking Authority (EBA) presented the outlines of the stress test, designed to show whether banks can keep an adequate level of capital in the event of a sharp economic downturn and market shock.
The ECB will also finalise the selection of bank portfolios that it plans to examine for the review by the middle of this month.
After that, the national bank supervisors and outside specialists will review banks' processes and accounting practices, analyse their credit exposures and provisions, and evaluate their collateral and real-estate assets, the ECB said.
© 2014 AFP