ECB AQR: Nervous Banks Make Banking Safer

European banks are uneasy. They’re concerned that – for the first time – they face a serious evaluation that could reveal big holes in their balance sheets. While the ECB is due to reveal the results of its ongoing asset quality review (AQR) only in October, officials reportedly will inform banks of serious deficiencies along the way so that the banks can address them immediately (“ECB set to alert banks to asset quality review problems,” FT, April 27, 2014). The fear is that rumors of a significant capital shortfall could trigger funding problems for a bank well before the AQR is complete.
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