ECB Begins Check of the 17-Country Eurozone Banks


The ECB begins its check of the 17-country Eurozone banks to determine their strength.   ECB, European Central Bank, completes an annual process to review the health and stability of each country’s banking system, including the size of the banking sector, by assets, and the number of credit institutions.

The last check-up showed that since the economic crisis in 2008, when financial investment companies and other institutions went under or were bailed out by government programs,the amount of assets in ECB banks decreased by 12 percent.  The number of credit institutions likewise was reduced by 10 percent.

One of the ways that the ECB has attempted to stimulate the economy is by setting a low interest rate to free up capital and to allow businesses to borrow money for expansion or to improve manufacture and marketing of consumer products and services.   Rates have been at a record low .5 percent now for seven months.

The ECB rate decision is set to be released on Thursday Nov. 7, at 12:45 GMT.  Analysts are predicting that rates will stay close to .5 percent, and that the goal of the ECB is still to foster growth by supporting businesses with these loans.

The report noted that the banks’ holdings now include more debt securities, such as government bonds. It was necessary to acquire easily liquidated assets to meet new regulatory requirements, however, these bond  holdings strengthen a bank’s links to government finances.  As a result, Europe’s troubles with government debt began during the last world economic crisis. European Union officials are trying to find ways to minimize the link.

If the check on Eurozone banks shows that there are loans that are not being repaid or if the ECB can identify banks that need to strengthen their finances by raising more capital, then they can develop policies to improve the banks’ chances overall.

The ECB would like to avoid the pitfalls of having a bank look good on paper, but upon further audits show major faults. These faulty institutions tend to require a bail-out to continue in business.  Therefore, the ECB wants to encourage a frank look at the health and prosperity of each country’s bank by taking public banking data and reporting it each year.

“This report is an important step towards understanding the changes in the euro area banking sector at an aggregate level,” said Vítor Constâncio, Vice-President of the ECB. “It provides an important base for the work we are doing in preparation for becoming the euro area’s single supervisor.”

The report delineated that at the end of 2012, France and Germany were still the largest banking nations in Europe, with total asset values of $13.5 trillion and $13.5 trillion, respectively.  Also, there was a decline in the number of branches of banks across the Eurozone.

The ECB also reported that the Median Tier 1 capital ratio in the Euro area went from 8 percent in 2008 to 12.7 percent in 2012. The median Tier 1 capital ratio is the core measure of a bank’s financial strength from a regulator’s point of view.  The increase should be encouraging to the ECB, whose supervision of EU banks is focused on a bank’s strength and stability.

As the ECB begins its check of the 17-Country Eurozone’s Banks, it will be able to estimate what improvements are needed across the 17 countries’ banking systems.

By Lisa M Pickering


ABC News












RSS Guardian Express

  • Autism and the Challenges of Easter April 18, 2014
    For most families living with an autistic loved one, everyday holds certain demands. Holidays, like Easter, provide even further challenges for those with autism. The traditions most people take for granted must be approached from a unique perspective. Zack, who is 11 years old, is moderate to high-functoning on the Autism Spectrum. He loves the […]
    Stacy Lamy
  • Peaches Geldof Funeral Arrangements Shared April 18, 2014
    The funeral arrangements for Peaches Geldof have been shared by her family. It will be a private funeral on Easter Monday (April 21), and will be held in the same church as her mother’s funeral. St. Mary Magdalene and St. Lawrence Church in Davington is also the same church that the 25-year-old socialite married and […]
    Alexandria Ingham
  • Game of Thrones Spoilers Ruining the Experience? April 18, 2014
    Sharing spoilers of Game of Thrones is ruining the experience for some people. They do not want to know what happens in the episodes before they get a chance to see it themselves. The issue reached its peak so far this week after many publications started sharing the events of the “Purple Wedding” just after […]
    Alexandria Ingham
  • Game of Thrones Spoilers Lead to Arguments Online April 18, 2014
    The internet has been surrounded with Game of Thrones spoilers this week that include the death of a certain character, and it has led to arguments online. Many people who have not read the books or seen the episode yet have gotten annoyed at publications for sharing the details of the character’s death, and even […]
    Alexandria Ingham
  • Miley Cyrus Hits Out at Hospital Rumors April 18, 2014
    Miley Cyrus has hit out at rumors suggesting her recent trip to hospital was due to her partying ways. A number of publications decided to jump on the idea that the 21-year-old was out partying in a way to get over the recent death of her dog, Floyd. In a statement, which she linked to […]
    Alexandria Ingham

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 626 other subscribers