ECB Faces Bankers Venting Concerns on Health Check

Updated on

European Central Bank officials are being lobbied by bankers over the complexity of gathering data for the health check of lenders and how to disclose the results, according to a briefing note obtained by Bloomberg News.

The European Banking Federation had nine main issues to address with officials at a meeting today of the “SSM Strategy Group,” the document, dated March 27, shows. An accompanying agenda said the gathering took place at the Frankfurt headquarters of Commerzbank AG, with Jukka Vesala, a director general in the ECB’s Single Supervisory Mechanism.

“The meeting was asked for by European banks to clarify how we can manage the huge amount of data requested by the ECB,” Federico Ghizzoni, the chief executive officer of UniCredit SpA, Italy’s biggest bank, told reporters in Milan. “I don’t know yet the result of the meeting. My feeling is that the ECB will remain set in its views.”

Euro-area banks are undergoing the unprecedented review of assets as part of preparations for a new single supervisory body led by the Frankfurt-based central bank. The exercise, aimed at restoring confidence in bank balance sheets to spur lending, is due to culminate in a stress tests based on the new asset data, with complete results to be published in October.

‘More Workable’

Raymond Frenken, a spokesman for the EBF, which represents lobby groups for the region’s lenders, said the organization won’t comment on specific elements of the ECB’s asset quality review such as the timing of meetings or individual documents. An ECB spokeswoman declined to comment on the document or today’s meeting.

According to the EBF document, the review should limit data requests to “make the exercise more workable and robust” by striking a balance “between feasibility of the exercise, timeline and data quality.”

Banks, whose loan files are being examined by about 5,000 auditors in the review, according to ECB Vice President Vitor Constancio, suggest replacing data templates and making “significant changes” to the schedule of the exercise to “maintain the stability of the process.”

They call for a simplification of data templates that cut the data points requested by the ECB by as much as half and raise concerns on the confidentiality of the data. They also warn of possible deviations of the review’s findings with banks’ own published reports and questions whether the procedure means assets are stressed twice.

Potential Conflicts

Banks are also concerned that potential conflicts between accounting figures and the outcome of the asset quality review may lead to legal actions against executives should last year’s results be restated. Banks are also looking for clarification on how and when eventual divergences between the ECB’s review and stated figures should be communicated to investors.

The central bank has said the asset review and stress test are related stages in a single exercise and there will be no partial reporting of results before the process is completed in October. Guidance on how the ECB will treat any change to key factors of bank’s solvency occurring after the 2013 accounts are missing, according to the document.

It also requested “more efficient” ways of provide current valuation of collateral, a major sticking point between the banks and the ECB. And finally, the group is asking for a “fluent dialogue between banks and the ECB” about the review’s findings and about how they will be communicated.