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The ECB has announced that in preparation for it assuming a full supervisory role it is to undertake a comprehensive assessment of banks. Although UK registered banks will not be covered by the review, there are some familiar names on the published list. The review will start in November 2013 and is expected to last for twelve months.
According to the press release the review aims to cover three key areas in advance of the operational start of the single supervisory mechanism in late 2014. These are a supervisory risk assessment, an asset quality review and a stress test. The aim of the review is to ensure: “transparency – to enhance the quality of information available on the condition of banks; repair – to identify and implement necessary corrective actions, if and where needed; and confidence building – to assure all stakeholders that banks are fundamentally sound and trustworthy.”
Although a risk assessment forms part of the review, the initial announcement suggests that this will concentrate on balance sheet risks and risk profiles rather than looking at the culture and attitude to risk of the underlying organisation.