As a result, confidence in the euro area banking sector is now starting to rise. This development has been recognised by the stock market where banks’ share prices increased by 41% in 2013, above market average growth of 20%.7 Nevertheless, the task of bringing back confidence in the EU banking sector is still underway.
This is why the Banking Union, and in particular the Comprehensive Assessment of banks’ balance-sheets, is so important. It will trigger corrective supervisory action where it is needed and dispel any remaining doubts about asset valuations and the corresponding level of provisions. This in turn, will help bring the deleveraging process in the banking sector to a swifter conclusion.