The European Central Bank has announced details of the comprehensive assessment of significant banks prior to the introduction of the Single Supervisory Mechanism (SSM).
Starting in November 2013, the exercise will take 12 months and will be carried out in collaboration with the national authorities.
The assessment is an important step towards greater transparency of banks' balance sheets and consistency of supervisory practices across Europe. It will consist of three elements: a supervisory risk assessment, a review of the quality of banks' assets, and a stress test to examine the resilience of banks' balance sheets to adverse scenarios.
The assessment will be based on a capital benchmark of 8% Common Equity Tier 1, drawing on the definition of the Capital Requirements Directive IV/Capital Requirements Regulation.
The results of the comprehensive assessment will be released in aggregate form together with any recommendations for supervisory measures.
