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ECB in driving seat in new euro zone bank supervision draft

By Eva Taylor FRANKFURT (Reuters) - The European Central Bank presented draft rules on Friday for how it will supervise commercial banks in the 18-nation euro zone from November, putting itself firmly in the driving seat. The draft of the Single Supervisory Mechanism's rules give the central bank wide-ranging powers, including the right to approve mergers and acquisitions and to demand that lenders increase their capital buffers.

Germany's top court questions legality of European Central Bank's bond-buying program

BERLIN - Germany's top court cast doubt Friday on the legality of a key part of the European Central Bank's rescue plan for the 18-nation eurozone, taking the rare step of asking an EU court for its opinion. The case involves the so-called Outright Monetary Transactions program, which allows the ECB to buy bonds of ailing eurozone members as an emergency measure. Though the program has never been used, its mere existence has been credited with easing the turmoil in bond markets that was threatening the euro currency bloc.

Eurozone bank audit weighing on lending: ECB chief

The prospect of an upcoming audit by European authorities is weighing on lending by eurozone banks, European Central Bank chief Mario Draghi said Thursday. "In the short term, one consequence of the asset quality review (AQR) is that banks have to clean their balance sheets and that has an effect on lending," Draghi told a news conference. "Lending levels are lower than if the AQR had not been there," he said.

ECB makes progress in preparations for bank audit

The European Central Bank said Monday it is making progress in its preparations for an audit of eurozone banks, aimed at boosting confidence in the sector after long years of crisis. "Preparations for the stress test are well underway and we are confident that, in close coordination with the EBA (European Banking Authority), the outcome will be transparent and credible, boosting the European banking sector," ECB vice president Vitor Constancio told a news conference.

European stocks slide on China data, Draghi comments

Europe's main stock markets fell on Thursday as investors digested weak Chinese economic data and a cautious outlook from European Central Bank chief Mario Draghi. However, the euro rallied on news that activity in the eurozone private sector economy hit a 31-month high in January as recovery gathered pace. In late morning deals, London's FTSE 100 index of top companies dropped 0.29 percent to 6,806.47 points.

EU bank resolution fund must come earlier: ECB official

A European fund for winding up failed banks must be fully up and running earlier than envisaged, European Central Bank executive board member Benoit Coeure said on Wednesday. "The period of ten years for moving towards a genuinely common SRF (Single Resolution Fund) is too long and should be shortened, possibly to five years," Coeure told an interparliamentary conference in Brussels. A copy of his speech was made available by the ECB. The SRF, to be paid into by banks, will gradually become up and running from 2016, but will not be fully operational for years.

Germany's Lautenschlaeger is first woman since 2011 to hold post in ECB's top board

FRANKFURT - The European Parliament has approved the nomination of a German central bank official to serve on the top leadership body of the European Central Bank. Bundesbank Deputy President Sabine Lautenschlaeger, 49, was approved Thursday by a vote of 443 to 47. The approval follows criticism from members of parliament about the absence of women in top ECB posts. Lautenschlaeger replaces Joerg Asmussen on the six-member executive board that runs the ECB day to day at its Frankfurt headquarters. Asmussen resigned to take a post with the German government.

ECB to simplify European bad loan definition in health check

FRANKFURT (Reuters) - The ECB is set to allow the euro zone's top banks to meet less stringent definitions for bad loans than previously planned when it makes an unprecedented review of lenders' balance sheets this year. The 128 lenders under scrutiny by the European Central Bank were allowed to apply the softer "simplified definitions" for bad loans in their first data submissions for the asset quality review (AQR).

Some banks easing lending ahead of stress tests: ECB's Honohan

DUBLIN (Reuters) - Some euro zone banks are restricting lending to boost their performance in financial stress tests this year, a member of the European Central Bank's (ECB) governing council said on Friday. The ECB will publish health tests of Europe's biggest banks before it takes over their supervision in November and there are concerns that lending will remain constrained until then and hamper the moderate economic recovery that is taking shape.

ECB gives thumbs up to woman on executive board

The European Central Bank on Thursday gave the green light to the appointment of a woman to its all-male executive board. Earlier this week, the Council of EU member states named Germany's Sabine Lautenschlaeger to the ECB's executive board, replacing compatriot Joerg Asmussen. The ECB's decision-making governing council has now approved the appointment, the central bank said in a statement.
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