* Banks say they face logistical problems with data
* ECB indicated it won't alter asset test schedule - sources
* ECB review will feed into EU-wide stress tests
* Exercises may force some banks to raise more cash
* Spanish banks fear test scenarios will be too harsh
(Adds Spanish bank concerns, Dimon quotes)
By Laura Noonan and Gianluca Semeraro
LONDON/MILAN, April 9 The European Central Bank
has dismissed the latest appeal by the region's biggest lenders
for concessions, including easier deadlines, to make rigorous
health checks of their industry less logistically onerous,
sources told Reuters.
ECB officials indicated to representatives of the European
Banking Federation, an industry lobby group, that they would not
alter the timetable of this year's "asset quality review", two
sources familiar with a meeting between the two sides said.
The meeting, held in Frankfurt on Tuesday, marked the latest
attempt by euro zone banks to get changes to the ECB exercise
which will feed into stress tests across the European Union to
ensure that lenders could survive a future crisis without
needing taxpayer-funded bailouts.
"There was nothing new from the ECB on the ... process at
(the) meeting and no indication of flexibility on timelines,"
one source familiar with the discussions told Reuters.
The ECB declined comment while a Brussels-based spokesman
for the EBF, which represents national banking associations from
across Europe, said it did not comment on specific meetings.
Federico Ghizzoni, CEO of Italian bank UniCredit, said on
Tuesday night that he did not know the outcome of the
discussions, but his impression was that the ECB would not
modify its requests for data.
"There was an operational meeting concerning the
difficulties of meeting the deadlines to submit the data for the
asset quality review, an issue raised not only by Italian but
also by European banks," he told reporters in Milan.
"It is a logistical difficulty arising from the amount of
data and the time frame, it is not about contents," he said.
Bankers say they do not want to water down the landmark
review of whether the euro zone's 128 largest lenders have
properly valued their assets, but need more time in preparing
for the complex process.
The ECB has repeatedly insisted there will be no slippage
from its plan to complete the review by October, which would
ensure any skeletons in the closet are dealt with before it
takes over as the euro zone's bank supervisor in November.
The stress tests could force some banks to raise more cash
to prove they can withstand another downturn without the kind of
state rescue a number needed during the financial crisis which
exploded in 2008. The aim of both sets of tests is to restore
confidence in European banks, whose shares remain valued at a
significant discount to their U.S. rivals.
Spanish lenders fear that excessively harsh economic
scenarios could be used in assessing their strength. "The stress
tests need to be based on plausible scenarios," Banco Popular
Chairman Angel Ron told shareholders earlier this week,
echoing similar comments from Bank of Spain deputy governor
Speculation is growing that the scenarios may include a far
deeper recession than the actual 3 percent drop in Spanish gross
domestic product between mid-2010 and mid-2013, as well as a
leap in unemployment from the current rate of 26 percent, which
along with Greece's is already the highest in the euro zone.
Such scenarios would create major hurdles for Spanish banks,
some of which took state bailouts following a property market
crash. The Bank of Spain declined comment and the European
Banking Authority (EBA), which is conducting the EU-wide tests,
said the scenarios would be disclosed by the end of April.
The EBA-approved scenarios are minimum standards EU banks
will be tested against, but national authorities have the power
to toughen them further for their own lenders.
Unlike in the United States, where banks were given a
thorough examination followed by recapitalisation in 2009,
European peers have undergone only half-hearted assessments
until now, and their problems are holding back economic growth.
Jamie Dimon, chief executive of JPMorgan Chase & Co,
said the U.S. banking industry had almost completely recovered
from the global crisis. "It can now do its job: financing growth
and employment. Unfortunately, Europe is not yet at the same
stage," he told French newspaper Le Figaro.
A 285-page manual setting out how assets will be examined
was published on March 11. But banks say the ECB's request for
data, which can run to more than a hundred fields per loan file,
are too onerous. Questions about some of the ECB's methodology
were also raised at an earlier meeting on March 26 between ECB
officials and senior executives from the 128 banks.
One source said those issues were also raised at Tuesday's
EBF meeting, but no progress was made.
"They take their manual as the Bible," said an attendee of
the March 26 meeting. "There is no world beyond the manual."
The EBF said it backs the overall exercise. "It is a
challenging process that is an essential step towards the
construction of the single supervisory and resolution
mechanisms," the spokesman said. "The EBF, as representative of
European banks, fully supports this complex process."
(Additional reporting by Sarah White and Jesus Aguado in Madrid
and Maya Nikolaeva in Paris; editing by David Stamp)