FRANKFURT (Reuters) - The European Central Bank will test the euro zone's top lenders on their resilience to sharp changes in interest rates after years of ultra-easy monetary policy, it said on Tuesday.
Ultra-low or negative ECB rates since the start of the financial crisis have eaten into banks' margins and led them to take on more risk for smaller returns, raising concerns about how the sector might cope once monetary policy is tightened.
The stress test exercise, which will simulate various scenarios between now and July, "is designed to ...understand the interest rate sensitivity of a bank’s assets and liabilities in the banking book and of net interest income to hypothetical interest rate changes," the ECB said.
- All of these celebrities have had their nudes leaked 35 Pictures
- PHOTOS: Apple Emoji update includes a llama, skateboard and some bagel drama 24 Pictures
"The banks’ overall capital demand – requirements and guidance – is not expected to change, all else being equal."
(Reporting By Francesco Canepa; editing by John Stonestreet)