The European Central Bank kept the euro zone’s top lenders on tenterhooks as it promised to reveal the strategy for its unprecedented review of bank balance sheets by the end of March, giving only scant detail on Monday.
The ECB’s asset quality review, or AQR, is part of a broader examination that also includes a stress test to see how banks hold up under shock scenarios, to avoid nasty surprises once it starts supervising them from November.
The exercise aims to encourage banks to recognize losses on loans or investments that have soured over time, allowing them to regain investors’ trust and free up capacity to grant new loans to help along the euro zone’s fragile economic recovery.
“We believe very much that recovery in 2015 will benefit from this exercise,” Constancio told reporters at a news conference.
