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Barclays Plc and Bank of America Corp., which picked Dublin as their new EU headquarters, will be assessed as early as possible this year, according to Sibley, who is also a deputy governor at the Central Bank of Ireland.
The examination may lead to higher capital requirements or losses on assets for some of the banks shifting regional businesses to Frankfurt, Dublin and other parts of the bloc following the U.K.’s separation from the EU. The ECB’s sweeping assessment shortly after taking over eurozone banking supervision in 2014 led to the identification of a 25 billion-euro ($28 billion) capital shortfall and recognition of more bad loans, but that wasn’t enough to prevent some lenders from collapse or seeking taxpayer-funded bailouts in the years since.
“It’s a rigorous process,” Sibley said of the review. “There’s more friction than there was before Brexit. That’s Brexit.”
The ECB’s assessment will include scrutiny of assets branded as Level 2 and 3, which are typically held largely by investment banks and are at least partially valued using estimates rather than external data, according to Sibley. Those assets “are inherently opaque and these are areas we’ve seen problems in in the past,” he said. [...]