* CEBS: similar methods set for next EU banks stress-test
* ECB's Constancio says test needs extra macro-risk layer
* Basel Committee official backs macro layer for stress test
* Banks warn testing may turn into heavy red tape
(Writes through with banking industry, Basel Committee reaction)
By Arno Schuetze
FRANKFURT, Nov 16 (Reuters) - European Union banking supervisors plan a repeat of this year's region-wide stress testing of banks, with the European Central Bank sparking concerns of more red tape by signalling it wants to play a bigger role.
"We are already working...on the next exercise. This will have more or less the same time schedule as this year so the result will be ready by June, we suppose," Giovanni Carosio, chairman of the Committee of European Banking Supervisors (CEBS), told Reuters Insider television on Tuesday.
Separately, the European Central Bank made clear it wants to take a bigger part in the next stress test in order to check on system-wide risks, sparking concerns among banks the test will become a bureaucratic box-ticking exercise.
Carosio said the structure of the test will also be similar with base line and adverse conditions scenarios set by the ECB and the EU's European Commission to check whether banks hold enough capital to withstand a crisis without taxpayer help again.
CEBS conducted a stress test in July. Just seven European banks failed and were ordered to raise their capital by 3.5 billion euros, much less than expected.
Critics said the test of 91 banks in 20 EU states was too soft and used flawed methodology. But the outcome calmed investor jitters at the time.
Carosio said the next test will be applied in the same "bottom up" way, whereby banks use their own internal models under supervision.
But ECB Vice President Vitor Constancio told the Euro Finance conference in Frankfurt that a top-down macro assessment of banks should be added.
"Such top-down macro stress tests should be conducted with the view to complement and cross-check the results of the bottom-up tests and assess, in particular, how the identified risks should be prioritised," Constancio said.
Such a task has already been formally given to the ECB hosted European Systemic Risk Board (ESRB) which will be launched in January to monitor broad risks in the financial system.
BOX TICKING
Constancio's push to broaden the ECB's role found heavyweight support.
"It makes sense to do a system-wide stress test for banks and not only a test for the individual banks. A more macro approach would make sense," said Stefan Walter, secretary general of the Basel Committee whose tough new global Basel III capital rules were approved last week by world leaders.
Carosio said it was feasible to run different methodologies side by side as Constancio suggested, but a purely top-down approach would decrease the validity of the test results.
"You need to have balancing checks that comparability is maintained. This is based on lessons learned," Carosio said, adding that the "rules of the game" needed to be more detailed and more information made public.
CEBS becomes the European Banking Authority (EBA) from January with stronger powers to impose binding technical rules on EU states.
Bankers feared mounting red tape, however.
"Banks have to be doing business and not just fill in forms," said Guido Ravoet, secretary general of the European Banking Federation.
"We are concerned about adding more layers of reporting. Adding too much reporting leads to box ticking with supervisors. There must be a right balance. I would favour that stress tests be done like now on an institutional base. We should build on what is existing," Ravoet said.
SIFI INDEX
Supervisors from the world's main economies are also putting together a package of extra measures for larger, systemically important banks (SIFIs) whose failure would be destabilising.
This work, under the umbrella of the Group of 20 leading countries (G20) will stretch to the end of next year due to disagreements over which banks should be deemed SIFIs and the use of safeguards such as a capital surcharge.
Carosio said SIFIs should be identified by using a mix of three factors: size, interconnectedness and difficulty in replacing such a firm if it failed.
"The problem is that some of this can be made into an indicator of some sort but in the end it will be necessary to declare some discretion on side of the supervisors," Carosio said.
"This opens the way to possible non-level playing field conditions -- an excess of discretion, if you like. So at the same time we will have to think about a peer review mechanism to ensure this is done in a fair and comparable fashion," Carosio said.
The G20's regulatory task force, the Financial Stability Board, said last week it will check how G20 countries apply extra measures on SIFIs to avoid unfairness.