ECB to start ‘stress-testing’ 124 eurozone banks next month

PanARMENIAN.Net - The European Central Bank said on Wednesday, Oct 23, it will start next month to "stress-test" and examine the balance sheets of 124 eurozone banks in advance of assuming its supervisory role, AFP reports.

"The assessment will commence in November 2013 and will take 12 months to complete," the ECB said in a statement.

It will be carried out together with national authorities and supported by an external consulting firm, it said.

The "comprehensive assessment" will look at "key risks", review the quality of bank assets and include "a stress test to examine the resilience of banks' balance sheets to stress scenarios".

Aside from building transparency and taking any necessary corrective actions, the exercise aims at "confidence building" and "to assure all stakeholders that banks are fundamentally sound and trustworthy".

"A single comprehensive assessment, uniformly applied to all significant banks, accounting for about 85 percent of the euro area banking system, is an important step forward for Europe and for the future of the euro area economy," ECB president Mario Draghi said in a statement.

"Transparency will be its primary objective. We expect that this assessment will strengthen private sector confidence in the soundness of euro area banks and in the quality of their balance sheets."

This outcome will be published before the ECB assumes its supervisory role of eurozone banks in November 2014.

Meanwhile, according to the Associated Press, Spain's central bank said preliminary figures show the country's economy grew in the third quarter, albeit modestly, following a recession that's lasted over two years.

The bank said Wednesday that the economy grew 0.1 percent July through September compared to the previous quarter, when it shrank an equivalent rate. The growth follows nine straight quarterly declines.

Even though unemployment in the country stands at 26.3 percent and the public finances are still a way from being fixed, the government has recently been heralding the end of the recession, claiming its reforms and austerity measures are paying off.

The bank's figures are an estimate and the first official statistics are expected Oct 30. The bank said that on a year-on-year basis, the economy shrank by 1.2 percent.