BlackRock helps ECB in bank stress test

FRANKFURT (Reuters) - A consultancy owned by the world's biggest investor, BlackRock, will help the European Central Bank in its stress test of top banks, the two organisations said on Wednesday.

The tests uncover sensitive information about banks, such as how many of their loans are likely to go unpaid, but the ECB said there was a strict separation between investors at BlackRock, which owns shares in all top European banks, and the consultancy arm.

The tests are the latest probe of big banks in the euro zone from carmaker Volkswagen's finance arm to France's BNP Paribas .

The ECB, put in charge of monitoring those banks after the financial crash, uses the check to identify problems at lenders.

The consultancy arm of BlackRock, BlackRock Solutions, has experts who help diagnose risks, for example, or put a value on risky loans.

The ECB said there was a separation between the consultancy work and other parts of the parent firm.

BlackRock itself manages $4.7 trillion and has stakes in all major European banks, including a 6 percent shareholding in Deutsche Bank .

"Confidentiality of information is secured by the terms of the contract," said a spokesman for the ECB.

BlackRock's consultancy arm has also helped the ECB design a scheme to buy asset-backed securities - loans that are bundled together and sold.

The ECB tests will probe 39 banks in the euro zone. The results will be ready towards the middle of the year.

Some analysts criticised earlier tests for underplaying the scale of banking problems.

Checks in late 2014 revealed modest capital holes at Greek banks, for instance. Later, after a leftist government came to power, capital controls were introduced and Greece nearly tumbled out of the euro.

Roughly 40 percent of Greek loans are now considered unlikely to be repaid.

(Reporting by John O'Donnell; Editing by Alison Williams)