Stress tests will ‘reignite mergers’

Bankers expect a thorough ECB healthcheck of the eurozone’s largest banks to reignite merger activity by rebuilding confidence among lenders.

The debt crisis has generated mistrust among banks and has caused an effective breakdown of cross-border bank investment flows.

But the ECB’s asset quality review, an assessment of the balance sheets of more than 120 banks that is due to be completed next autumn, should bring transparency on the quality of banks’ loans and other assets, bankers, and regulators at the World Economic Forum in Davos said.