A review of banks' health led by the European Central Bank can be considered a success before they are completed as banks have raised around €200 billion in preparation, a top Bundesbank official said today.
European banks have undertaken a number of measures to fortify themselves for the ECB's so-called comprehensive assessment.
These measures include raising equity, retaining profit, reducing risks, and selling investments, Bundesbank board member Andreas Dombret.
He made his comments in an interview in the daily newspaper Handelsblatt.
"It's already clear now that the exercise is a success because European banks have strengthened their balance sheets by around €200 billion," Dombret said.
He has been in charge of banking supervision on the Bundesbank top board since May.
The low interest-rate environment, however, poses continued risks for banks by depressing earnings, he added.
Corporate bonds also posed a potential risk due to their overall high valuations, which could fall in case of an external economic shock or a sudden turn in interest rates, he said.
But Dombret said he was not concerned about inflation in the common currency zone.
"We believe chances are very low of a deflation scenario in the euro zone and do not currently see any typical signs of deflation, like the postponement of large, private purchases," he was quoted as saying.
The results of Europe's most comprehensive review of banks' health will be released on October 26.
