Bankers fear leaks from ECB health check

Tue Mar 18, 2014 3:00pm EDT
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By Andreas Kröner

FRANKFURT (Reuters) - Euro zone bankers are worried that sensitive information will leak out before the official publication of the bloc's review of bank balance sheets, triggering speculation and making investors uneasy.

The European Central Bank is putting the euro zone's 128 largest banks through a rigorous health check before it becomes their supervisor in November and plans to publish the results in one go in October to avoid market disruption.

Even if some banks were to issue positive news about the tests, that might put pressure on other banks to show how well they compared.

"We see this as a problem," said Stefan Winter, head of UBS's UBSN.VX German investment banking operations on Tuesday. "There are several questions, which haven't been fully discussed yet."

Michael Kemmer, head of the German BdB banking association, pointed earlier this year to a significant danger that some information would come out between now and October.

"Such leaks would be poisonous for the financial sector. They could unnerve investors and thereby run counter to the initial aim of the exercise," he told Reuters at the time.

The ECB wants the review to help restore trust in the financial sector, by pushing banks to come to terms with non-performing loans and clean up their balance sheets so they are able to lend more again to companies and households.

Sources told Reuters last month that the ECB was in talks with the European Securities and Markets Authority (ESMA) to find a way to deal with leaks and rumors.   Continued...

Artists Justus Becker, aka COR (L) and "Bobby Borderline" work on their graffiti mural on a fence surrounding the construction site for the new head quarters of the European Central Bank (ECB) in Frankfurt, March 14, 2014. REUTERS/Kai Pfaffenbach