Most of the lenders that failed the European Central Bank’s balance-sheet test have been let off for good behavior.
Only eight lenders haven’t already plugged capital gaps or satisfied the ECB with plans to shrink, out of 25 found with a shortfall. That means just 6.35 billion euros ($8 billion) remains from a 25 billion-euro hole, and half of that is in Italy. The ECB, releasing results of its year-long bank audit yesterday, said investors should focus on the insight they’ve gained into lenders’ books instead.
Just over a week before the central bank becomes the financial supervisor of the euro area, officials are attempting to end half a decade of financial turmoil with full disclosure on any bad loans and mispriced assets. The ECB is staking its reputation on this exercise convincing investors that lenders are clean and can again play a role in reviving a stalling economy.
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