Comprehensive Assessment. Stress test manual. August 2014

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Publication Date August 2014
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The European Central Bank (ECB) published on the 8 August 2014 a manual detailing how it will incorporate findings from its Asset quality reviews (AQR) into stress test projections. It also describes the stress test quality assurance process, which is vital to ensuring that the exercise is robust and credible.

The comprehensive assessment is a thorough check of the balance sheets and resilience of the biggest banks prior to the ECB taking on its supervisory tasks in November 2014. The ECB’s comprehensive assessment differs from previous EU-wide stress test exercises in that it comprises a thorough asset quality review and includes a 'join-up' of the AQR and stress test outcomes. This enables a more accurate assessment of bank balance sheet conditions, as well as of credit and other risks on banks’ books.

The quality assurance of the stress test would focus on delivering results that were accurate, consistent and credible. Various quality checks would be performed in cooperation with national competent authorities. The ECB would compare findings for individual banks with those of their peers and would apply its own top-down stress test model. Banks might be required to provide further evidence as part of a 'comply or explain' approach, in addition to providing further analysis and, if necessary, resubmitting their stress-test projections.

The final results from the comprehensive assessment would be published in the second half of October 2014.

Source Link Link to Main Source https://www.ecb.europa.eu/pub/pdf/other/castmanual201408en.pdf
Related Links
EU Bookshop: Some ECB publications can also be downloaded via the EU Bookshop website http://bookshop.europa.eu/en/european-central-bank-cbzZYKABstuhoAAAEjIokY4e5K/
ECB: Publications http://www.ecb.europa.eu/pub/html/index.en.html
ESO: Background information: EU-wide stress testing 2014 http://www.europeansources.info/record/eu-wide-stress-testing-2014/
ESO: Background information: ECB: Note on the Comprehensive Assessment, July 2014 (Stress Tests) http://www.europeansources.info/record/note-on-the-comprehensive-assessment-july-2014/
ECB: Press Release, 08.08.14: ECB publishes Comprehensive Assessment Stress Test Manual https://www.ecb.europa.eu/press/pr/date/2014/html/pr140808.en.html
ESO: Background information: State aid: Commission approves resolution aid for Portuguese Banco Espírito Santo http://www.europeansources.info/record/press-release-state-aid-commission-approves-resolution-aid-for-portuguese-banco-espirito-santo/
EurActiv, 25.08.14: Spain to wait for stress tests before more Bankia stake sales http://www.euractiv.com/sections/euro-finance/spain-wait-stress-tests-more-bankia-stake-sales-307938

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