Only half of banks accept ECB terms

The ECB will rewrite a non-disclosure agreement with lenders undergoing its current health check after fewer than half the institutions agreed to the terms.

“We’re working closely with banks and as part of this, we will address feedback received on the non-disclosure agreement in a revised version to issue to banks in the coming days,” the Frankfurt-based ECB said in a statement.

As it subjects about 130 of the eurozone’s largest banks to a year-long asset review and stress test, the ECB is nervous of leaks endangering financial stability.

Results from the assessment are due to be released to the public in the second half of next month, before the central bank takes over financial supervision duties for the region in November.

While about 60 banks have already signed an original secrecy agreement, the ECB received letters of complaint from lenders across the eurozone voicing concern that the terms of the agreement would infringe national laws governing securities disclosure, a eurozone official familiar with the discussions said. The person asked not to be identified as the issue isn’t public.

The ECB had asked banks to commit to secrecy about the process without limitation in time, according to a letter from German bank lobby group Die Deutsche Kreditwirtschaft seen by Bloomberg News.

In the letter, addressed to ECB Supervisory Board chairwoman Daniele Nouy and ECB Executive Board member Sabine Lautenschlaeger, and dated September 12, the group said the scope of the non-disclosure agreement was too broad.

“We are especially concerned about the unlimited validity of the declaration,” the group said.

By requiring secrecy even after the publication of the stress test results, banks may not be allowed to comment “meaningfully”, according to the letter.

The ECB plans to publish results of a review of banks’ books and their performances in stress tests in October before taking over as supervisor of Europe’s largest banks on November 4.

“Any such legally required publications should explicitly be excluded from the scope of the declaration and should not result in any legal consequences,” the letter states.

The ECB is aware of the potential ambiguities in the original text, and the intention had not been to override national laws, the eurozone official said.

Banks will begin to discuss the impact of preliminary findings from the comprehensive assessment with the ECB in Frankfurt starting next week.

“With each and every bank, this will be a very intense meeting, giving the bank a very clear understanding of what are the topics that have an impact on their CET1 ratio,” Elke Koenig, president of Germany’s Bafin regulator said last week.

The ECB requires lenders to be able to maintain levels of high- quality capital, known as CET1, of 8% in the asset review and 5.5% in the adverse scenario of the stress test.

More in this section

Lunchtime News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up