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UPDATE 1-ECB to reveal bad loan hurdles for euro zone bank test -sources 

March 18, 2014
Laura Noonan, Reuters

The European Central Bank's stance on how bad loans are defined will be one of the biggest revelations to the euro zone's largest banks when it details on Tuesday how it will test balance sheets, three sources with knowledge of the tests told Reuters.

The details will give the 128 banks being tested their most explicit insight to date on how their books will be examined by inspectors looking at whether they need billions of euros of extra capital to strengthen balance sheets. Estimates of the capital shortfall range from 280 billion euros ($388.13 billion)to as much as 770 billion.

The tests are being carried out to restore investor confidence in the banks and clean up any problems left over from the financial crisis before the ECB becomes their supervisor in November.

As well as the initial review on whether banks' assets are correctly valued now, banks will also be subjected to a stress test looking at whether they need more capital to deal with future crises.

Read more: Reuters


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