LONDON, July 10 The type of balance sheet checks
being faced by banks across Europe to draw a line under the
financial crisis are not foolproof, Britain's top banking
supervisor said on Thursday.
Top euro zone banks are undergoing so-called asset quality
reviews (AQR) where the European Central Bank sifts through
their books to check for poor quality loans. The BoE itself has
also conducted asset quality reviews on UK lenders.
"AQRs are designed to assess the more structural features of
loan books as well as their performance, including whether
forbearance is being applied by the lender," BoE Deputy Governor
Andrew Bailey said.
"The granularity with which AQRs are undertaken can vary
with their purpose, but there is always a fairly high level of
intensity in terms of the closeness of the inspection,"
The AQR in the euro zone is a precursor to a wider European
Union stress test of leading banks in a bid to finally draw a
line under a protracted financial and government debt crisis.
"In the best of all worlds, supervisory initiated AQRs
should not reveal anything that isn't already known. I will just
say that experience shows that we are not there yet," Bailey
(Reporting by Huw Jones; Editing by Andrew heavens)