ECB tested as push-back against bank review rules begins

Mon Mar 24, 2014 12:26pm EDT
 
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By Laura Noonan

FRANKFURT (Reuters) - The European Central Bank's (ECB) determination to subject the euro zone's largest banks to the same, rigorous checks is being tested, with countries lobbying for their banks to be treated differently and lenders asking for their workload to be eased.

Almost two weeks after the ECB published a 285 page manual spelling out how it will examine banks' trillions of euros of assets, lenders in Germany and Spain are leading the charge for special treatment, while banks across the euro zone have asked for changes to the process to make it less onerous.

The ECB has resisted the lobbying from Spanish and German banks, but has agreed to adapt the data gathering process following some field testing, issuing revised guidance on this in recent days, sources familiar with the matter told Reuters.

The central bank is carrying out the wide-ranging tests so it can start with a clean sheet when it becomes the euro zone's banking supervisor in November. The tests are designed to banish lingering investor doubts about the health of the region's banks that have kept their valuations consistently below U.S. peers.

LEVEL PLAYING FIELD

A key ECB objective is for the tests to be consistent across all 18 euro zone countries, so results are directly comparable.

Banks in Spain have pushed for an easing of rules requiring collateral to be independently valued if existing valuations are more than a year out of date, Reuters reported last week.

Sources close to the matter told Reuters German banks were also lobbying against automatic writedowns on collateral with older valuations, arguing Germany's housing market is stable, and so there is no need for frequent valuations.   Continued...

 
The headquarters of the European Central Bank (ECB) are pictured in Frankfurt June 6, 2013. REUTERS/Ralph Orlowski