When Europe made an announcement about the recent top banks’ health check earlier last year, it made a promise of comprehensively assessing their preparedness to survive a new financial crisis.
A sense of compromise that is comprehensive has become just as relevant.
Reuters had an interview series with officials, several bankers, as well as the ones involved who are involved in the financial inspection conducted by the European Central Bank of the biggest banks of the euro zone. It shows that within the seven months it has spent since it was established, the ECB already needed to reject countless special treatment requests from national supervisors and banks.
Simultaneously, based on anonymous sources, supervisors made revisions on the manner they are valuing assets. Also, banks failed to supply all the required data – multiple compromises which might cumulatively be a threat to the reputation of the tests as consistent and tough.
The ECB, that is going to take over as the region’s top banks’ supervisor on the 4th day of November, did not give further comments regarding the concerns raised but pushed that the exercise got thorough and robust.
On the 26th day of October, it is going to make an announcement saying which among the 130 largest banks in Europe have given proper value to their assets, as well as the ones which have not. It will also announce whether these banks will be required higher capital to survive another crisis in the economy. Result anticipation is now affecting the shares of banks, especially with the fall of Monte dei Paschi of Italy on an all-time low just last week, despite fears that it is going to be strongly required to produce more cash.
According to a spokeswoman, the said health check that was conducted is unprecedented when it comes to transparency, scale and rigor.
