Friday, Jul 23, 2010
Spanish troubles, more news this afternoon
The Times: Fears for Spanish banks in stress tests
Financial markets await the results of “stress tests” on the financial health of 91 of Europe’s largest banks today, with reports that 18 of the smaller Spanish savings banks would fail to pass when results are released this afternoon. There remain questions about the condition of six Greek banks being tested as part of the exercise.
Posted by refusetobuy @ 10:15 AM (771 views) Add Comment
3 Comments
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1. icarus said...
These stress tests are as big a joke as the American ones, which allowed the banks to use their own models to determine the value of their securities. The Telegraph has already indicated that some of the European bamks will test themselves.
From Bloomberg News: - "European stress tests on 91 of the region’s biggest banks drew criticism from analysts who said regulators are underestimating probable losses on Greek and Spanish government bonds. The tests are designed to assess how banks will be able to absorb losses on loans and government bonds, the Committee of European Banking Supervisors said yesterday. Regulators have told lenders the tests may assume a loss of about 17 percent on Greek government debt, 3 percent on Spanish bonds and none on German debt, said two people briefed on the talks who declined to be identified because the details are private.
Credit markets are pricing in losses of about 60 percent on Greek bonds should the government default (probably by leaving the euro and restructuring their debt - my comment), more than three times the level said to be assumed by CEBS. Derivatives known as recovery swaps are trading at rates that imply investors would get back about 40 percent in a Greek default or restructuring."
2. Crunchy said...
The Chinese have the right idea when it comes to dealing with cowboys.
Do it yourself.
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