European Economy: Europe moves away from Wall Street Pressure - ECB's bank stress test results set for 26 October

The results of Europe's most comprehensive review of banks' health will be released on October 26, the European Central Bank and the European Banking Authority said today.

The test results will give the clearest picture yet of the state of the European banking sector.

The ECB hopes the tests will banish fears about the health of European banks, which were hit hard during the financial crisis, and restore investor trust and revive lending to euro zone households and companies.

This is key to getting economic recovery back on track.

While the ECB is putting the euro zone's 130 largest banks through a backward-looking asset quality review and forward-looking stress test, the EBA will also run stress tests on banks in Britain and some other non-euro countries.

UK banks face an additional test to their resilience to withstand a sharp drop in housing prices and the Bank of England said the result of this will be published on December 16.

The ECB has said lenders will have six months to cover any capital shortfalls reported in its asset quality review or the baseline stress test scenario, and nine months to cover any capital shortfalls from the adverse stress test scenario.

"Following the publication of the results, banks will, where necessary, have two weeks to submit capital plans to the ECB, detailing how shortfalls will be covered," the ECB said today.

It has imposed the rigorous tests to wipe the slate clean before it takes over as the bloc's banking supervisor in November - part of a broader push for European integration to avert future crises.

EU-Digest