Banks Shall Reassess Their Property Portfolios Before the Stress Test

20/03/2014 – Cinco Dias

Spanish banks will have to re-valuate between 1% and 20% of the high risk portfolios containing their real estate property that have been included in the ECB´s Asset Quality Revision. The Commission calls for more up-to-date appraisals, i.e. drawn after January 1st 2013.

The Spanish entities have been negotiating validity of the 2012 assessment based on the Oliver Wyman´s stress tests, however the ECB clearly stated the need of new valuations of awarded and collateral property. In fear of high cost and long readjustment period, banks tried to defend the earlier results claiming they simply needed update. (…) The arguments have been rejected.

(…) Not only have Spanish banks received the impact, but also German entites quarreled that the reassessment could unnecessarily harm the sector.

(…) According to the AQR rules, by October, from 1% to 20% of the highest risk portfolios of the entities involved in the examination will have been analyzed. (…)



Original article: Cinco Días

Translation: AURA REE