Tuesday September 2, 2014 Search
Weather | Athens
29o C
23o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
ECB sees bad-debt rules as threat to credible bank review

By Sonia Sirletti & Jeff Black

The European Central Bank is concerned that national differences in how bad debt is classified could cripple its probe into the health of euro-area banks, according to an internal ECB document.

Bad-debt classification practices across Europe show “material differences that, if not considered, would severely affect the consistency and credibility of the exercise,” according to the undated document obtained by Bloomberg News. A person familiar with the text said it was drawn up in late November and contains the ECB’s latest thinking on the subject. An ECB spokeswoman declined to comment.

The Frankfurt-based ECB is conducting a three-stage assessment of bank assets before it assumes oversight of about 130 lenders across the 18-member euro area this November. Using a strict definition of bad debt could threaten banks in countries hit hardest by Europe’s debt crisis, while a laxer rule may not reveal the true condition of the region’s financial system.

“A more ambitious definition would be consistent with the need to convey to external observers that the AQR is a thorough exercise,” the document said, referring to the Asset Quality Review stage of the Comprehensive Assessment. That’s set to culminate with a stress test run in cooperation with the European Banking Authority before October this year.

The ECB document said that not all countries may be able to comply with simplified definitions of non-performing loans set out in October by the London-based EBA, the EU’s top bank regulator, while saying that alignment to those rules is “of the essence.”

The ECB signaled it would apply the EBA’s simplified definition as a minimum, and where possible increase the level of detail on loans made by banks. The EBA sets financial standards for the 28 nations in the European Union, and is working with the ECB on the final part of the Comprehensive Assessment.

That minimum means the ECB would define as non-performing all exposures, including loans, debt securities, financial guarantees and other commitments, which are past due for more than 90 days. That differs from final, more complex, standards, due to be implemented by EBA by the end of this year, that include data on the likelihood of the borrower repaying. Only half of the countries examined could supply that data, according to the ECB report, while limiting the definition to the 90-day rule “seems feasible for the majority of countries.”

Euro-area lenders from Banco Santander SA (SAN) in Spain to Alpha Bank SA (ALPHA) in Greece will come under ECB supervision, with oversight forming the first pillar of a nascent banking union designed to mitigate future financial turmoil.

ECB policy makers have said the central bank will provide more information on the treatment of non-performing loans and the parameters of the concluding stress test by the end of January.

While the simplified EBA rules should be adhered to in the Comprehensive Assessment as a minimum, adding further detail to the assessment could be possible since ECB officials will already be in contact with bank staff, the document said.

“Given the possibility to perform more granular analysis during the on-site visits, it is proposed that this analysis takes into account a more ambitious definition including the unlikeliness to repay criterion,” according to the document.

The ECB said that as there are so many variations between countries on the definition of forbearance -- where banks shift the terms of a loan to account for a change in the debtor’s own income -- the only possibility is to accept national definitions where they exist, as well as loans that were considered in that category until the end of 2012 but have since been recategorized.

For countries where no standard definition exists, the ECB said it may ask states to report all loans for which concessions have been granted as forborne. [Bloomberg]

ekathimerini.com , Tuesday Jan 14, 2014 (11:17)  
New committee formed to assess progress of deregulation in closed-shop professions
Tourism targets rise ever higher
Horse race betting hurdle removed for OPAP
Revised GDP data confirm that Greek growth is near
Rain and storms with hail expected in many parts of Greece
Rain and possible storms are expected in many parts of Greece on Tuesday, and particularly in the islands of the Ionian and on mainland Greece, where hailstorms are also likely, the Hellenic...
Education minister calls for probe into predecessor´s reform plan
Following reports that a plan to reform the tertiary education sector launched in the spring of 2013 failed to lead to millions of euros in savings, Education Minister Andreas Loverdos on Mo...
Inside News
BASKETBALL
Greek hoopsters go top of their group in World Cup
Greece has qualified to the second round of the FIBA World Cup after going top of its group of six through a third win in as many group games in Spain. On Monday it beat Puerto Rico 90-79 in...
SOCCER
Fulham striker Mitroglou set to re-join Olympiakos
Greek champions Olympiakos Piraeus are set to re-sign Kostas Mitroglou on loan from English second tier club Fulham after the striker arrived in Athens for talks on Sunday. An Olympiakos spo...
Inside Sports
COMMENTARY
Politicized archaeology
Let us suppose that archaeologists discover that the tomb uncovered in Amphipolis was not the resting place of Roxana or Nearchos, but of Alexander the Great. Let us assume, that is, that ar...
EDITORIAL
Moderating expectations
Politics is, to a great extent, all about managing expectations, and anyone who raises that bar too high or too fast is at serious risk of disappointing and losing the people’s favor. In a c...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. New committee formed to assess progress of deregulation in closed-shop professions
2. Rain and storms with hail expected in many parts of Greece
3. Greek hoopsters go top of their group in World Cup
4. Tourism targets rise ever higher
5. Horse race betting hurdle removed for OPAP
6. Revised GDP data confirm that Greek growth is near
more news
Today
This Week
1. Politicized archaeology
2. Rain and storms with hail expected in many parts of Greece
3. Moderating expectations
4. New committee formed to assess progress of deregulation in closed-shop professions
5. Excavation work at Amphipolis reveals section of marble mosaic floor
6. A great president
Today
This Week
1. Thessaloniki mayor Boutaris sworn in wearing yellow star amid Golden Dawn protests
2. The battle against progress
3. Attack on gay couple in Athens leaves one man needing surgery
4. Strong undersea quake occurs off island of Milos, felt in Athens
5. Greek quest for debt relief faces hurdles in Paris
6. Hardouvelis, ECB executive discuss bank program, stress tests
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.