ECB keeps banks on tight leash for health check results

The European Central Bank wants to give banks just 48 hours to review the results of a balance sheet health check so it can guard against data leaks even though the banks would like more time. The ECB is carrying out the most detailed ever review of the euro zone's 128 largest banks before it becomes the region's financial supervisor in November.
Its aim is to restore confidence in Europe's banking sector that has traded at lower valuations than its US counterpart since the financial crisis due to uncertainty about the health of European banks' balance sheets. The results of the eight-month exercise are due in October and the ECB is holding meetings in Frankfurt this week to tell bankers how they will be released to the banks and the markets.
The bank faces a delicate balancing act in trying to keep its work under wraps and avoid breaches of market disclosure rules, while not blind-siding banks with unforeseen capital demands that they could struggle to fulfil. Two people familiar with the Frankfurt discussions told Reuters the ECB proposed giving banks 48 hours warning of their results ahead of the publication date in late October.
"Banks can't comprehend this highly complex ... process within 48 hours in a way that they can sign it off in good conscience," one person familiar with the matter told Reuters. The ECB said the 48-hour deadline was one element in an ongoing dialogue with the 128 banks it was reviewing. "We will communicate with the banks directly concerning exact timelines for the disclosure of the final result of the Comprehensive Assessment closer to the end of the process," a spokesman said.
Liane Buchholz, managing director of VOEB, which represents Germany's public sector banks, said lenders should be given at least a week to study the results before they are published. "Forty eight hours is by no means sufficient to check the data that is to be published and to correct any mistakes," she said. A spokesman for DSGV, which represents Germany's savings banks, said lenders would need time to review their figures to prevent the publication of incorrect data, which could lead to significant damage.
The European Banking Federation (EBF), that represents banks across the region was more circumspect. "EBF supports banks being given time to see beforehand what will be published, even though 48 hours is a very short time to understand conclusions reached by ECB of this substantial data gathering and analysis exercise," Robert Priester, Deputy Chief Executive for the European Banking Federation, said. The ECB aims to publish figures for each bank including total assets, risk exposure and a widely used gauge of balance sheet muscle known as common equity tier one capital, one banker, who attended the meeting, said.