The ECB moves to cool speculation that at least 11 banks may fail its stress tests when results are published on Sunday, October 26. As Sara Hemrajani reports, 130 banks are under the microscope - and some do look vulnerable.
Checking the vital signs of Europe's banks. On Sunday, the ECB will reveal the health of 130 of the region's financial institutions. The forensic review is designed to make sure they've shored up enough cash to deal with future risks. The last test in 2011 was criticised for not being rigorous enough, but now many analysts say the ECB's method should prove credible. Rabobank's Jan Lambregts. SOUNDBITE: Jan Lambregts, Head of Financial Markets Research, Rabobank, saying (English): "Our expectation is that the stress tests are really quite stressful, and that there will be a considerable amount of banks coming out that need to redress certain issues there. That should boost confidence." Rumours are swirling about which banks have failed. One report says at least 11 have capital shortfalls, while Pimco puts that figure at 18. Lenders in Europe's periphery are the main - but not the only - suspects. Linklater's David Ereira compiled a report on the progress the banks have been making. SOUNDBITE: David Ereira, partner, Linklaters, saying (English): "The markets which are going to be most affected, certainly in the short term, are likely to be Italy, Spain, possibly Portugal and Austria. Interestingly enough, there may also be some German banks." The ECB is trying to cool speculation ahead of this weekend's results. Ereira says the central bank's ultimate objective is to guarantee a stable European banking system that can provide credit for consumers and corporations. SOUNDBITE: David Ereira, partner, Linklaters, saying (English): "One of the things that I think will come out of the current process, and going forward, is a greater degree of consolidation, a greater degree of specialisation - people identify the markets that they should be in, need to be in and can succeed in." Should the ECB manage to convince investors, it may spark a relief rally in eurozone banks. Chris Beauchamp is market analyst at IG. SOUNDBITE: Chris Beauchamp, market analyst, IG, saying (English): "So if you get a decent set of results for things like ING, Credit Agricole, even BNP Paribas, you could see those banks begin to bounce back sharply as hedge funds close their short positions." More than 6,000 experts have scrutinised the banks' balance sheets. The ECB takes over as eurozone banking supervisor on 4th November. Mario Draghi and his team will, no doubt, want to show they're already on top of their game.