Biggest Banks’ Debt Holdings to Be Published by EBABen Moshinsky
The European Union’s top banking regulator will reveal data on the sovereign debt and types of capital held by the bloc’s biggest lenders as it forgoes a stress test for a second year.
The European Banking Authority, set up in 2011 to harmonize banking rules, may publish the data as early as October and include additional information on banks’ cross-border investments across the EU. The agency has previously revealed lenders’ holdings of European sovereign debt as part of annual stress tests.
The EBA scrapped the 2013 exam in favor of a review of lenders’ asset quality led by the European Central Bank, which will become the euro area’s chief banking supervisor. European leaders last year decided that the central bank should become a regulator in a bid to ease the currency bloc’s fiscal crisis by breaking the link between bank solvency and national public finances.
“One of the positive feedbacks we received from our 2011 stress test was the unprecedented level of disclosure, some 3,400 data points per bank, providing consistent information which helped to dispel rumors of hidden concentrations in banks,” Piers Haben, director for banking oversight at the London-based EBA, said in an e-mailed statement.
“This was followed up by disclosure on capital and sovereign positions in 2012 and the EBA plans to maintain the momentum of these disclosure exercises in 2013,” Haben said.
Eight banks failed the 2011 exams, which were criticized for failing to catch problems at other lenders, with a combined shortfall of 2.5 billion euros ($3.3 billion billion).
Investors expected as many as 15 banks to fail and raise 29 billion euros after assessments, according to a survey by Goldman Sachs Group Inc. Dexia SA, the French-Belgian lender, received a clean bill of health and then failed after a bank run three months later.
The EBA told lenders a year later, in what it described as a capital-raising exercise, to hold on to more than 200 billion euros in profits and investments accumulated to pave the way for tougher global standards, known as Basel III, and in response to concerns about the quality of their European sovereign bond portfolios.
The EBA today told banks to hold on to the capital raised through the past year, because it “is essential for maintaining the flow of lending to the real economy,” Andrea Enria, chairman of the EBA, said in an e-mailed statement.
Regulators have sought to increase transparency in banking. Lenders face requirements to publish information about their buffers of liquid assets to be drawn on in a crisis, under rules proposed by the Basel Committee on Banking Standards last week.
“Public disclosure improves transparency, reduces uncertainty in the markets and strengthens market discipline,” the group of global banking supervisors said in a statement on its website.
The U.K. Financial Policy Committee has also urged lenders to reveal more information about how the models they use to calculate the riskiness of their assets. Complying with the disclosure guidelines “would reduce the opacity to investors of the differences in risk weighted assets across banks and over time,” the committee said in a June 26 report.