ECB takes zero tolerance stance on banks' health check complaints

LONDON/MILAN, April 2 Wed Apr 2, 2014 12:53pm EDT

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LONDON/MILAN, April 2 (Reuters) - The European Central Bank (ECB) will push banks to the limits with data requests for its upcoming review of their books and insist on common treatment for all 128 banks, it told Reuters, signalling it will not give way to complaints raised by lenders.

The ECB is preparing for its new role as the euro zone's banking supervisor by assessing whether the region's biggest lenders have fully recognised losses already incurred, and whether they have enough capital to deal with another crisis without publicly-funded bailouts.

Banks have baulked at the onerous requirements of the review, which is billed as the most comprehensive they have ever undergone, could force them to raise extra capital and is designed to restore investor confidence in a sector that's valued well below its U.S. peers.

"At the March 26 meeting in Frankfurt all the banks complained, especially French and German ones," UBI Banca chief executive Victor Massiah said on Monday, referring to a meeting between senior bank executives and ECB officials. He added the ECB had requested a huge amount of data and the process was very laborious for banks.

A report in Italy's Il Messaggero newspaper said the ECB had agreed to talk to banks on a one-to-one basis about some specific cases on real estate asset valuations after banks' protested about the review's demands.

The ECB's rules require independent valuations for all assets where valuations were more than a year out of date in January 2014.

NO EXCEPTIONS

"We are committed to create a level playing field with comparable situations and comparability of results. Different treatment is not an option," an ECB spokesperson told Reuters in response to questions about the potential for reaching agreements with banks on an individual basis.

"The consequence is that we need to push banks to their limits with respect to data requests, to harmonised definitions and comparable descriptions."

A separate report in Spain's Vozpopuli online newspaper said French banks protested at the unacceptable workload imposed by the tests, which include more than 100 fields of data for one loan file.

Banks have been fighting a rearguard action against the details of the review since they were announced on March 11. (ID:nL6N0MI3T1)

"Of course banks are complaining about workload, it does require additional work," said one national supervisory source. "If we are going to do a thorough job, we'll go through them again (asset valuations), and that's it."

"Common sense is allowed, but I would not say that we'll make any exceptions," he added. (Additional reporting by Lisa Jucca and Silvia Aloisi in Milan; Reporting by Laura Noonan; Editing by Mark Potter)

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