The publication of pan-European bank stress tests, due in June, could face delay as national regulators debate how to implement and interpret the rules, three people familiar with the matter said.
German banks were on track to pass the test after two landesbanks recently changed their capital structrure, these sources also said today.
German regulator BaFin said stress test data had been submitted to the European Banking Authority and there were no preliminary findings.
The EBA will, within the next couple of days, set a date for publication of the stress test results, one source said.
An EBA spokeswoman said: "The peer review and quality assurance process has commenced and it is important that appropriate time is taken to carry out this rigorous process.
"As the challenge process reaches conclusion, the EBA will set a date for communication. As we have previously stated, we expect to publish the results in June."
Questions have emerged over how to define regulatory capital, over how to account for asset reduction programs, funding levels and even over what constitutes interest income, a source familiar with the matter said.
The questions emerged after national regulators submitted stress test results to the EBA. Methodology outlined by the EBA was not thorough enough and left too much room for interpretation, another source familiar with the tests said.
European banks face questions from up to three different national regulators as part of a so-called 'peer review' process, a source said.
"Every Friday, new e-mails with heaps of questions arrive," another source said.
One of the central questions being debated was how to account for plans to reduce so-called risk weighted assets and, in particular, over what constitutes a binding pledge to reduce such assets. The more risky assets a bank has on its balance sheet, the higher the levels of capital - a safety buffer against losses - need to be.
Two German banks with uncertain prospects - public-sector lenders Helaba and NordLB - rushed to change their capital structure in the past few weeks.
The German state of Hesse adjusted the capital structure of its stake in Helaba, changing the design of its €1.9 billion lower-quality capital contribution so it counts as hard capital under new Basel III bank rules.
Separately, the state of Lower Saxony injected €600 million in ordinary capital into NordLB in addition to a transformation of €1.1 billion in lower-quality capital into equity. The banks have said these measures will allow them to pass the EBA stress tests.
Hypo Real Estate, which failed last year's stress test, was set to pass this time tranferring €173 billion in risky assets into a "bad bank".
Reuters
