The European Banking Authority will for the first time publish details of banks' losses from fines and litigation when it releases the results of European Union- wide stress tests later this year. As many as 12,000 data points per bank will be disclosed, including on their risk weighting of assets, sovereign debt holdings and the structure of capital holdings, the London-based regulator said in a statement on its website today.

The EBA will include misconduct-related costs in its assessment of how much capital banks have raised or lost in 2014. “By disclosing data in a consistent and comparable way across the single market, the EBA will bring greater transparency to EU banks, contributing to enhanced market discipline of the entire EU banking sector,” the agency said.

Fines and litigation have eaten in to banks’ provisions since regulators toughened their stance on conduct following the 2008 financial crisis.

Barclays, the UK's second biggest lender, could face as much as £7 billion of litigation costs in the next four years, according to a report by Nomura International last month.

This year's stress test will be the third conducted across the EU since the sovereign debt crisis began. It will be the first to form part of the European Central Bank's examination of lenders, known as the Comprehensive Assessment, as the ECB prepares to take over direct supervision of about 130 euro-area banks from BNP Paribas SA to National Bank of Greece SA in November.

The EBA will also include a so-called fully-loaded common equity tier one capital ratio when it publishes the stress test results. That takes into account all capital rules in place by 2019, rather than just the 2014 version used to determine the stress-test results this year.

Bloomberg