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European Banking Regulator Postpones Next Stress Tests to 2016 European Banking Regulator Postpones Next Stress Tests to 2016
(about 7 hours later)
LONDON — European banks will have another year to prepare for the next round of stress tests that will examine the ability of the region’s lenders to survive a potential financial crisis or severe economic downturn.LONDON — European banks will have another year to prepare for the next round of stress tests that will examine the ability of the region’s lenders to survive a potential financial crisis or severe economic downturn.
The European Banking Authority, the banking regulator of the European Union, said on Tuesday that it would conduct its next Europe-wide stress test in 2016, rather than this year.The European Banking Authority, the banking regulator of the European Union, said on Tuesday that it would conduct its next Europe-wide stress test in 2016, rather than this year.
The banking regulator will instead conduct a transparency exercise this year intended to provide detailed data on banks’ balance sheets and loan portfolios. That exercise will be similar to one the authority conducted in 2013.The banking regulator will instead conduct a transparency exercise this year intended to provide detailed data on banks’ balance sheets and loan portfolios. That exercise will be similar to one the authority conducted in 2013.
The decision was driven by an acknowledgment that lenders have strengthened their capital positions in response to reviews last year, the regulator said in a news release.The decision was driven by an acknowledgment that lenders have strengthened their capital positions in response to reviews last year, the regulator said in a news release.
In October, the European Banking Authority and the European Central Bank announced the results of parallel reviews of lenders. The central bank’s test, known as an asset quality review, focused on 130 big banks in the eurozone, which at the time comprised 18 countries. The European Banking Authority’s test included banks in Britain, Sweden and other European Union countries that are not part of the eurozone.In October, the European Banking Authority and the European Central Bank announced the results of parallel reviews of lenders. The central bank’s test, known as an asset quality review, focused on 130 big banks in the eurozone, which at the time comprised 18 countries. The European Banking Authority’s test included banks in Britain, Sweden and other European Union countries that are not part of the eurozone.
In its stress test, the authority identified 14 banks that fell short of the capital requirements and that would need additional buffers to prepare for a potential economic downturn.In its stress test, the authority identified 14 banks that fell short of the capital requirements and that would need additional buffers to prepare for a potential economic downturn.
The Federal Reserve in Washington is expected to announce the preliminary results of its own stress tests this week, which will include the United States units of several European banks.The Federal Reserve in Washington is expected to announce the preliminary results of its own stress tests this week, which will include the United States units of several European banks.
The E.C.B. is not planning on repeating last year’s comprehensive assessment in 2015,” a spokesman said.
But even with no broad stress test planned this year, local banking supervisors in Europe, whether it is the E.C.B. in the eurozone or the Prudential Regulation Authority in Britain, routinely conduct tests and reviews of the banks under their supervision throughout the year.