LONDON, May 16 (Reuters) - Supervisors across the European Union will examine the way that top banks classify and value loans and other assets to ensure that the stress tests they conduct do a better job of finding any problems.
The European Banking Authority (EBA) said on Thursday it will set out guidelines for the review, which will delay the bloc’s next round of stress tests until 2014.
EBA Chairman Andrea Enria said the checks would help boost the credibility of the next pan-EU stress test of banks.
Previous stress tests failed to spot problems on bank balance sheets in euro zone countries including Spain, Ireland and Cyprus which required international bailouts.
The European Central Bank needs to finding any remaining problem areas before taking banks under its wing in the first stage of a planned banking union.
The results will also be important for the debate over the next stage of the banking union - the creation of an authority to wind up troubled euro zone banks quickly.
The asset quality review will be conducted by the ECB in the 17 EU countries that are joining the new European Banking Union.
In the remaining 10 EU member states, the national banking regulator will conduct the review, selecting which banks to focus on and which assets to scrutinise.
The EBA said the actual timing of the asset review and subsequent stress test will be determined once a new law setting up the ECB as banking supervisor in the 17 euro zone countries is adopted.
The results of the asset quality reviews are expected to be published alongside the outcome of next year’s stress test.