ECB Tested by Banks Amassing Capital With Four-Year Life
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Lenders are loading up on capital to pass the European Central Bank’s balance-sheet exam on Oct. 26. Four years from now, some of it will count for nothing.
The ECB has spent a year pouring over the books of 130 of the euro area’s largest lenders in a Comprehensive Assessment intended, as President Mario Draghi put it, to “bolster confidence” in the banks. Yet the ECB’s rigor may be partly undermined by the test’s basic measure, the European Union’s capital rules.