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ECB announces details of upcoming assessment on banks

The European Central Bank announced details of the bank assessment to be conducted in "preparation of assuming full responsibility for supervision as part of the single supervisory mechanism." The assessment will consist of three elements: i) a supervisory risk assessment to review, quantitatively and qualitatively, key risks, including liquidity, leverage and funding; ii) an asset quality review to enhance the transparency of bank exposures by reviewing the quality of banks’ assets, including the adequacy of asset and collateral valuation and related provisions; and iii) a stress test to examine the resilience of banks’ balance sheet to stress scenarios. The assessment will be based on a capital benchmark of 8% Common Equity Tier 1.