One of the most important financial events of this year is the European Central Bank’s Asset Quality Review. The review is the opening act in the central bank’s health check of the eurozone’s biggest lenders, which goes by the glamorous title of the Comprehensive Assessment.
The ECB today published details of the second phase of its AQR, which will see national regulators, under the scrutiny of the ECB, scour the balance sheets of the region’s 128 biggest lenders to see what’s lurking in the darkest parts of their loan books. Unlike most earlier exercises, the exercise will focus on those murkiest of corners — what are known as lenders’ Level 3 assets.
Here’s a quick Q&A on what that entails. Read more