EU banking supervision defers bank test to 2014
European Banking Authority (EBA) has since 2011 worked for a harmonization of the regulation of EU banks the administrators still intends to disclose information about union banks in the second half of 2013. Authority, EBA, has decided to postpone the crucial stress tests to 2014 to make way for the study of asset quality, as the European Central Bank will implement as part of its overall compliance unit.
Euro zone banks will be exempt from stress tests from the union bank regulation under ECB until next year. EBA estimates that the ECB's quality check will alleviate concerns about the deterioration of asset quality as a result of the macroeconomic environment in Europe.
Next year, the ECB takes over as the supreme authority over euro zone banks and the EBA will on this occasion attempt to embrace both methods and timing of the ECB, said the London-based supervision
There are 2 options the banks can make use of this grace period or extension.
- Prepare an action plan on how to automate these stress tests (avoiding a series of excel inputs and calculations) and integrate the stress testing process into the transactions and operations. (agree easier said than done, however to avoid major mishaps, this could be the best way forward.
- Start the test procedure from zero base and built it up from scratch taking into consideration all the other changes to the various compliance and risk components
- Business as usual. Keep the current test processes on hold and anticipate more information and programs perhaps from the oversight authority and check the appropriate boxes.
