EBA delays next EU-wide stress test of banks until 2014

The European Banking Authority (EBA) announced that it has agreed on recommendations to supervisors to conduct asset quality reviews on top EU banks, which will postpone the region`s next round of stress tests until 2014.

A delay, however, would help boost the "credibility of the next EU-wide stress test" of banks and "help dispel concerns over the deterioration of asset quality to macroeconomic conditions in Europe, the EBA said on its website yesterday.

The next round of stress tests should clear the way for the European Central Bank before taking the helms of an underway banking umbrella covering the euro area, as previous stress test failed to diagnose some debt-stricken euro banks.

The asset quality classification and valuation will be conducted by the ECB in the 17-nation euro zone that are joining the new European Banking Union. The ECB will supervise the banks of those countries starting next year.

The national banking regulator will conduct the review in the rest of 10 EU-member states. Meanwhile, the EBA will work some details of bank holdings of sovereign debt, scheduled to be provided in the second half of 2013.

The ECB, a hub harmonizing banking rules across the EU, also said that the actual timing of the asset quality review and next stress tests will be determined once a new law setting up the ECB as banking supervisor is upheld.