* For factbox, see
* For graphic on euro zone and U.S. bank valuation: link.reuters.com/buf36v
(Adds quotes from Constancio TV interview, German banks
By Laura Noonan
LONDON, July 17 The European Central Bank has
laid out plans to publish an unprecedented trove of data on
individual banks - from measures of leverage to non-performing
loans - when it completes a landmark health check in October.
The ECB, soon to become Europe's most powerful banking
supervisor, also said on Thursday it will give banks just two
weeks to come up with plans to deal with their shortfalls,
though they will get some advance warning of major problems and
will have between six and nine months to actually raise funds.
The central bank is reviewing the asset valuations of the
euro zone's 128 most important lenders and assessing their
ability to withstand future crises. The results will be
published in the second half of October, before the ECB takes on
bank supervision on Nov. 4.
"The ECB has been very transparent in engaging with banks
and aims to provide as many details as possible to markets and
other participants on progress in the comprehensive assessment
and what the end of the process will look like," said Danièle
Nouy, chair of the ECB's supervisory board.
As well as publishing a template of the six pages of data it
will give per bank, the ECB detailed milestones including plans
to give banks "partial and preliminary" results in
"September/October" while withholding the final results until
"very close" to publication.
As reported by Reuters on July 9, the disclosure template
includes the 'leverage ratio', a blunt measure of banks' total
assets to equity that lenders are not yet required to disclose.
. In Thursday's documents, the ECB said the
leverage ratio was "displayed for informational purposes only"
and had no impact on banks' capital shortfall.
Along with headline capital ratios, the ECB will disclose
details of banks' portfolios, including areas where regulators
made the largest adjustments to asset valuations.
Standardised ratios for non-performing loans as a percentage
of outstanding loans will be given for the first time, along
with standardised figures on the level of loan-loss provisions
they have taken relative to their bad loans.
That will enable analysts and investors to make more
meaningful comparisons between banks' loan books. European bank
valuations have trailed U.S. peers over the financial crisis.
The results will be based on banks' positions at the end of
2013 but will include details of any funds raised in the capital
markets between Jan. 1 and Sept. 30. It will also include
information on any fines or litigation costs that have eaten
into capital, such as the $9 billion fine levied on BNP Paribas
for sanctions breaches.
Banks with capital shortfalls will have to present plans to
tackle them within two weeks. They will be given templates
showing what the capital plans should look like over the coming
Vítor Constancio, vice-president of the ECB, said he was
confident those that need to can raise additional capital.
"We have seen that since last year banks have been able to
raise quite a lot of capital already," Constancio told Reuters
Insider television. "There is a lot of front loading since last
year by many banks anticipating the exercise.
"All these measures to strengthen the balance sheet - we
estimate that since July last year they represent strengthening
by 198 billion euros ($268 billion)," he added.
Reuters data show European banks have raised $35.5 billion
from selling shares so far this year; others have raised capital
by retaining earnings and selling assets.
Gerhard Hofmann, executive board member of Germany's BVR
banking association, said: "If the objections of the
Comprehensive Assessment are uncontroversial, it is realistic
that banks can compile a capital plan within two weeks."
But Michael Kemmer, head of the association of German banks
(BdB), whose members include Deutsche Bank and
Commerzbank, said: "The designated deadline of two
weeks to submit a plan to plug capital holes is too short."
The ECB said its "general expectation" was that banks would
use the purest form of equity capital to cover shortfalls
revealed by the asset review and the 'baseline', or most likely,
This means banks cannot use asset sales as the default
remedy for shortfalls, although sell-offs are eligible as
exceptional measures when the assets are distinctly separate
from normal business.
Banks with shortfalls based solely on the asset quality
review can offset this with earnings from 2014.
Banks who fail based on the adverse scenario, which models
problems in everything from house prices to economic growth and
inflation, will be allowed "limited use" of other kinds of
higher quality capital including some types of bonds that
convert to equity.
The next step in the process will come in early August, when
the ECB discloses how it will join up the results of the
asset-valuation review and a forward-looking stress test on how
well-positioned banks are to withstand future crises.
The ECB said on Thursday that banks have already submitted
preliminary results from their stress tests to their regulators.
The ECB will spend the coming weeks carrying out quality
assurance on the stress-test analysis the banks have done. In
September, the stress test models will be updated with the
outcome of the asset review, including revised assumptions about
the categorisation of loans and the probability of losses.
"Only then can the full results of the comprehensive
assessment be determined," the ECB document said.
($1 = 0.7392 Euros)
(Reporting by Laura Noonan; Additional reporting by Andreas
Kroener and Paul Carrel in Frankfurt; Editing by Larry King/Ruth