* EBA chief says more cleaning needs to be done at European
* Signals there could be changes in the way stress tests are
* Says derivatives, real estate exposures may need further
(adds more comments on stress tests, derivatives)
By Emma Thomasson
DAVOS, Switzerland, Jan 24 The European Banking
Authority (EBA) is seeking more information on goings on at
Italian bank Monte dei Paschi di Siena, which said on
Wednesday it faced losses of as much as 720 million euros ($956
million) on past derivatives trades.
Monte dei Paschi, Italy's third-largest bank and one of the
few in Europe not to meet the EBA's stress test, already had to
ask for 3.9 billion euros in state aid last year to plug a
capital hole stemming from its vast government bond portfolio
and hedging bets gone wrong.
On Wednesday the Tuscan lender said it was reviewing three
more loss-making structured trades related to its lending that
only recently came to light.
"I cannot say anything, but I am in contact with relevant
authorities for the bank (Monte dei Paschi) to get more
information on what is going on," EBA's Chairman Andrea Enria
told Reuters TV on Thursday.
Enria, who is attending the World Economic Forum in
Switzerland, said banks in Europe had been carrying out a lot of
writedowns, but more cleaning was needed: "These type of
products, derivatives, commercial real estate exposures, are
probably still needing some further checks."
The EBA will conduct its next stress test of EU lenders this
year, and Enria signalled changes should be expected.
"The objective of the last stress tests was to boost the
capital positions of banks. Now that this boost has occurred, we
are moving to a different set up," Enria said.
"The ECB is coming to the picture as a supervisor for the
bulk of banks of the euro area and maybe beyond, and this will
mean we have to interact and cooperate with them quite closely,
which we are already doing."
Enria said this is "not an ideal set-up that you would have
designed from scratch".
The focus of the next stress test will be on seeing that
banks are moving to implement Basel III, the global accord
requiring banks to hold more and better quality capital and cash
buffers to withstand shocks.
Basel is being phased in from this month over six years.
Enria said there has not been enough restructuring in the
banking industry and there was still too much excess capacity.
"The more restructuring, the more we push the banks to
change, the more we will see the banks finance the economy
again, to start to lend again," Enria said.
(Reporting by Emma Thomasson, Writing by Lisa Jucca and Huw
Jones; Editing by Will Waterman)