ECB will reveal unprecedented amount of data after bank stress tests
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The European Central Bank (ECB) on Thursday laid out plans to publish a trove of data on individual banks - ranging from measures of their leverage to a standard level of non-performing loans - on individual banks when it completes a landmark review.
The central bank also said it would give lenders just two weeks to come up with plans to deal with capital shortfalls.
The ECB is reviewing the asset valuations of the euro zone's 128 most important lenders and assessing their ability to withstand future crises. The results will be published in the second half of October, before the ECB takes on bank supervision on Nov. 4.
"The ECB has been very transparent in engaging with banks and aims to provide as many details as possible to markets and other participants on progress in the comprehensive assessment and what the end of the process will look like," said Danièle Nouy, chair of the ECB's supervisory board.
As well as publishing a template of the six pages of data it will give per bank, the ECB detailed milestones between now and the end of the tests, including plans to give banks "partial and preliminary" results in "September/October" while withholding the final results until "very close" to publication.
FULL REVEAL
As reported by Reuters on July 9, the disclosure template includes the 'leverage ratio', a blunt measure of banks' total assets to equity that lenders are not yet required to disclose.
Along with the headline results of capital ratios, the ECB will also make extensive disclosures about banks' portfolios, including details of the areas where regulators made the largest adjustments to banks' asset valuations.
Standardised ratios for non-performing loans as a percentage of outstanding loans will be given for the first time, along with standardised figures on the level of loan-loss provisions they have taken relative to their bad loans.
This will allow analysts and investors to make more meaningful comparisons between the state of banks' loan books, something they have complained about being unable to do in the past.
Giving investors the tools to make more informed decisions about European banks is a key objective of the tests since European bank valuations have trailed their U.S. peers over the financial crisis.
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