Constancio Says Asset Review to Make ECB Stress Test Harder

European Central Bank Vice President Vitor Constancio said the fact that euro-area bank balance sheets will be probed before undergoing a simulated economic downtown later this year makes the test harder to pass.

“We have our own big add-on, in that we will integrate the results of the asset-quality review into the stress test, which will aggravate the results of the stress test,” Constancio said in Frankfurt today after giving an update on the ECB’s health check of the financial system. The ECB said the region’s largest banks will have to show their capital won’t fall below 5.5 percent of their risk-weighted assets in a crisis, matching stress-test parameters set by the European Banking Authority.