European Banking Authority will not run stress tests in 2015
By Stephen Jewkes
MILAN (Reuters) - The European Banking Authority (EBA) will not this year run stress tests to gauge whether European banks have sufficient core capital to withstand shocks to the system, it said on Tuesday.
"Instead of a stress test, in 2015 EBA will be running a transparency exercise in line with the one conducted in 2013," it said in a statement on its website.
The industry watchdog said the exercise would provide detailed data on the balance sheets and portfolios of European lenders.
The decision not to proceed with another stress test this year reflected progress made by European Union banks in strengthening their capital positions after an asset quality review and EU-wide stress test, the EBA added.
Last year, Europe's main banks had their balance sheets scrutinised to make sure they were valuing assets properly and not trying to avoid making provisions for loans souring because of the protracted economic crisis.
In an interview on Tuesday in Italian newspaper La Repubblica, EBA head Andrea Enria said he was satisfied with the previous stress test but in the next round of tests would like to include the effects of bankers' bad conduct.
"Selling the wrong products to clients, infringing money laundering rules, helping tax evasion, manipulating interest rates and the sanction risks ensuing from such behaviour," were examples of what he had in mind, he said.
EBA will publish a discussion paper to help improve the reliability of risk-weighted data in banks' internal models before the 2016 tests, he said.
Big banks use their own computer models to assign a level of risk to each asset on their books, which in turn determines how much capital they should hold to safeguard against loans or other assets turning sour.
The EBA said on Monday the first EU-wide benchmarking exercise under its new rules on transparency will be run based on banking data for the fourth quarter of this year.
Enria told a parliamentary hearing in Rome on Tuesday that an EBA proposal to apply lower capital charges on high quality, simple asset-backed securities would be ready in June.
The proposal is part of a push by the European Union to revive the market for securitised debt, he said.
(Additional reporting by Alberto Sisto in Roma; Editing by Louise Heavens and Greg Mahlich)
