Results of the European Central Bank's Asset Quality Review (AQR)
of 130 lenders in the region are due on October 26 and will be the
latest indicator of the European Union's economic recovery.
Known as a stress test, the check-up looks at a bank's ability to withstand a future crisis and comes as the ECB takes over as a banking supervisor on November 4.
Anticipation of the results has already impacted bank shares; last week, Italy's Monte dei Paschi slumped nearly 10 percent to a record low amid fears it would fail the tests.
If a bank does fail the tests, they will have to raise capital from stock markets. In the case they are unable to do so, experts say they may have to impose losses on bondholders or tap governments or Europe's bailout fund, the European Stability Mechanism (ESM).
Read more: How many banks will fail ECB stress tests?
Known as a stress test, the check-up looks at a bank's ability to withstand a future crisis and comes as the ECB takes over as a banking supervisor on November 4.
Anticipation of the results has already impacted bank shares; last week, Italy's Monte dei Paschi slumped nearly 10 percent to a record low amid fears it would fail the tests.
If a bank does fail the tests, they will have to raise capital from stock markets. In the case they are unable to do so, experts say they may have to impose losses on bondholders or tap governments or Europe's bailout fund, the European Stability Mechanism (ESM).
Read more: How many banks will fail ECB stress tests?
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