By Francesco Canepa
FRANKFURT (Reuters) - The European Central Bank is monitoring roughly 100 smaller euro zone banks that it deems riskiest, on top of the 123 large institutions that fall under its remit as the bloc's top supervisor, a source close to the matter said on Thursday.
The ECB started supervision of the euro zone's largest lenders late last year, while 'less significant' banks remained under the watch of national authorities, albeit in cooperation with the ECB.
Soon after taking over, the ECB quietly expanded its purview to include around 100 smaller banks that it sees as riskiest or most interconnected, meaning that they could affect other institutions if they got into in trouble, the source said.
"There are 100 plus or minus that we singled out as the riskiest or most interconnected and we keep a close eye on (them)," the source said.
These banks continue to be supervised by national authorities and the degree of the ECB's intrusiveness is unclear.
The ECB will carry out a fresh round of stress tests on behalf of the European Banking Authority next year, focussing on 50-60 large euro zone banks.
According to the rules of the euro zone's Single Supervisory Mechanism, the ECB can decide at any time to supervise any euro zone bank directly to ensure that supervisory standards are applied consistently.
