Walter Says ECB Bank Oversight Based on Unprecedented Analysis

The European Central Bank will be better able to identify lenders with poor risk management than any previous supervisor, according to the official soon to be responsible for monitoring the region’s largest banks.

“We are going to carry out Europe-wide, comparative analysis of banks that have similar business models,” Stefan Walter, director general for Microprudential Supervision I at the ECB, said in a speech in Frankfurt today. “That wasn’t possible in the previous nationally oriented supervision system. A comparative peer-group analysis like this is an effective instrument for supervisors to identify banks which are lagging behind the risk- and business-models of other banks.”

The ECB will take up oversight duties on Nov. 4. and is currently building a more detailed record of the balance sheets of euro-area banks than has ever been available. Officials from the 128 lenders covered by the health check, or Comprehensive Assessment, are meeting ECB staff in Frankfurt this week for an update.

“I want to emphasize that we’re going to use a multiplicity of methods to assess the risks in the banking system, and use them to direct our approach to supervision,” Walter said.

Walter, a former secretary general of the Basel Committee on Banking Supervision and senior vice president at the Federal Reserve Bank of New York, was appointed to the ECB in January.

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