Mon, Jun 08, 2015 - Page 15 News List

ECB supervisory board plans stress tests of big banks


The European Central Bank’s (ECB) Supervisory Board is to carry out stress tests of big eurozone banks next year, board chair Daniele Nouy said in an interview released on Saturday.

“There will be a public and general stress test next year. It could only concern a part of the 123 banks that we supervise directly,” Nouy was quoted as saying by German newspaper Die Welt.

Nouy gave no details on how the tests would be performed. Since November last year, the Single Supervisory Mechanism, an autonomous unit within the bank, has been Europe’s banking watchdog and is directly responsible for monitoring 123 banking groups.

A stress test is a simulation of various scenarios of financial crisis that probes the strength of banks’ balance sheets.

“There is always smaller scale, targeted tests about specific risks. Whenever we ask a bank, ‘What would happen if...?’ It is a type of stress test,” Nouy said.

The watchdog led an extensive review last year of banking assets in the eurozone and a stress test that revealed capital needs at about ten financial institutions in the region.

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