The European Central Bank has very little time to complete an asset quality review of the continent’s largest banks, Aareal Bank AG Chief Executive Officer Wolf Schumacher said.
“I can only see what’s coming at us: high complexity, many costs, unbelievably short timeframe and no sensitivity for the different business models and bank systems in the individual countries,” Schumacher said in an interview in Frankfurt today, after the bank reported fourth-quarter earnings.
The ECB is due to complete its review by November, when it assumes oversight of the 128 biggest banks from national regulators. Inspectors from the regulators, the ECB and auditing companies started arriving at banks across Europe this week, including several located in Germany, Austria and France.
Aareal, which specializes in real estate financing, posted fourth-quarter net income of 27 million euros ($37 million) compared with 18 million euros a year earlier, according to an earnings statement handed to reporters today. Net interest income climbed 27 percent to 147 million euros.
There are a lot of costs involved in the ECB’s review, Schumacher said.
The ECB’s inspection and stress tests, alongside other regulatory issues such as compensation and the Single Euro Payments Area, or Sepa -- a new payments integration system -- are adding up for banks, he said.
“We have to watch out particularly for mid-sized companies that we don’t overkill these topics,” he said.
Aareal shares climbed 0.9 percent to 29.64 euros in Frankfurt at 4:42 p.m., heading for the highest closing price in more than a month and valuing the company at 1.77 billion euros. The Bloomberg Europe Banks & Financial Services Index fell 0.6 percent to 111.10.
The bank set aside 113 million euros for loan losses last year compared with 106 million euros in 2012, it said. Volume of new business was 10.5 billion euros in 2013, the highest since 2007 and compared with a forecast of more than 8 billion euros, the lender said.