On 29 April 2014, the European Central Bank ("ECB") announced that where the results of the comprehensive assessment show that a bank has a capital shortfall, the bank will be required to remedy the shortfall within a set deadline. The deadline for shortfalls identified in the asset quality review ("AQR") or the baseline stress test scenario is six months from the date of disclosure of the results of the comprehensive assessment. The deadline for shortfalls identified in the adverse stress test scenario is nine months from the date of the disclosure of the results of the comprehensive assessment. The results of the comprehensive assessment are expected in October 2014. Capital shortfalls under the AQR or baseline stress test scenario must be met by Common Equity Tier 1 capital. Shortfalls from the adverse stress test scenario can be covered in other ways but the use of convertible capital instruments is limited. The comprehensive assessment, announced by the ECB in 2013 as part of its preparation for assuming responsibility for the prudential supervision of Eurozone banks under the Single Supervisory Mechanism, comprises the AQR and the EBA stress test.The ECB is due to assume its new responsibilities in November 2014.
The ECB announcement is available at:
http://www.ecb.europa.eu/press/pr/date/2014/html/pr140429_1.en.html.
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