- Andrew Stimpson, a London-based banking analyst at Keefe Bruyette & Woods Ltd
As the European Central Bank is set to take centre stage as the region's chief banking supervisor, banks across the Eurozone are going to face tough regulatory scrutiny of their balance sheets. On Thursday, the ECB agreed that a review of banks' assets should be carried out in order to build on stress tests later, which are determined to what extent lenders could fight deepening financial crisis. The European Banking Authority set up two years ago to harmonize rules across the European Union, decided to delay stress tests until 2014.
"The EBA stress tests were really dependent on whether the ECB was ready to do its own asset quality review in the second half of the year," said Andrew Stimpson, a London-based banking analyst at Keefe Bruyette & Woods Ltd. "I think the market will still take it positively in the short term," he said. "We don't really think that banks need more capital but if investors were, then it's the ECB test that they should be more interested in."
"Clearly the ECB is keen to make sure that it has done its utmost to make a comprehensive assessment of the state of the banks over which it will have supervisory responsibility from next year," said Richard Reid, a research fellow for finance and regulation at the University of Dundee in Scotland.
© Dukascopy Bank SA