Jump to content
House Price Crash Forum
Sign in to follow this  
thecrashingisles

25 Banks Fail Ecb Stress Tests

Recommended Posts

http://online.wsj.com/articles/about-25-eurozone-banks-to-fail-ecb-stress-tests-1414163478

About 25 eurozone banks failed the European Central Bank’s financial-health checks, although more than half of these lenders have taken the necessary steps to shore up their balance sheets this year, according to a person familiar with the matter.

Of these banks, 11 or 12 still have additional capital needs, according to the person. There are no German or French banks among those dozen or so lenders, though there are Italian banks, the person said.

The ECB is due to release the final results of its asset-quality review and stress tests on Sunday. They were based on bank data for the end of 2013, but many banks have since taken steps to raise capital.

“The ECB can’t comment on speculation about the outcome of the comprehensive assessment. Any inferences drawn as to the final outcome of the exercise would be highly speculative until the results are final” on Sunday, an ECB spokesman said.

Share this post


Link to post
Share on other sites

What is the public supposed to make of this unless they are told which banks failed the stress test? 123 banks tested. 25 failed. Failure rate of over 20%. 9 Italian banks, 3 Greek banks and 3 Cyriot banks. No French or German banks. 10 banks of unknown nationality. I'd be interested to see the same approach taken with other services. '20% of hospitals/restaurant/cars/airlines etc are unsafe, but we're not going to tell you which ones and it might damage their business.'

Share this post


Link to post
Share on other sites

What is the public supposed to make of this unless they are told which banks failed the stress test? 123 banks tested. 25 failed. Failure rate of over 20%. 9 Italian banks, 3 Greek banks and 3 Cyriot banks. No French or German banks. 10 banks of unknown nationality. I'd be interested to see the same approach taken with other services. '20% of hospitals/restaurant/cars/airlines etc are unsafe, but we're not going to tell you which ones and it might damage their business.'

Its OK, the ECB say these banks need their balance sheets adjusted.

Next time im skint, Ill tell the bank manager I need my accounts adjusted.

Share this post


Link to post
Share on other sites

What is the public supposed to make of this unless they are told which banks failed the stress test? 123 banks tested. 25 failed. Failure rate of over 20%. 9 Italian banks, 3 Greek banks and 3 Cyriot banks. No French or German banks. 10 banks of unknown nationality. I'd be interested to see the same approach taken with other services. '20% of hospitals/restaurant/cars/airlines etc are unsafe, but we're not going to tell you which ones and it might damage their business.'

Nothing is unknown all the details including names of all banks that failed are on the ECB web site, seek and you will find. ;)

Share this post


Link to post
Share on other sites

Not a single Spanish bank on that list. A country where property has collapsed and everyone is on the dole.

No German Landesbank, a group which makes NR over-capitilised.

Share this post


Link to post
Share on other sites

Not a single Spanish bank on that list. A country where property has collapsed and everyone is on the dole.

No German Landesbank, a group which makes NR over-capitilised.

Adjustments my dear boy.

Share this post


Link to post
Share on other sites

Shaun Richards wrote on this on Friday.

http://notayesmanseconomics.wordpress.com/2014/10/26/the-ecb-banking-stress-tests-explained/

'The ECB wants you to believe that the European banking sector is safe and sound. I would say as safe as houses but that phrase has not always worked out so well in the credit crunch era! Of course I am sure that at least some of you are wondering why this is necessary in the first place? That is because there are genuine doubts about various aspects of the European banking system. In specific terms we have seen Banco Espirito Santo fail in Portugal and Corpbank or KTB fail in Bulgaria. Those who place their face in deposit insurance may like to know that (h/t Frances Coppola who posted on this yesterday) that the situation I discussed about it not paying out for Corpbank depositors remains true. This deserves much more publicity than it is getting as it poses lots of questions for a system of deposit insurance which is supposed to be European wide.

Comment

The essential issue here is the difference between the answer presented and reality. Rather than actually making European banks safe the actual purpose is to make it look as though they are safe. So a relatively small number of banks will be found to have a shortfall and procedures will then be put in place to fix that. However if there is a genuine shark in the water we are extremely unlikely to be told the truth and their lies the rub as Shakespeare would have put it.

Also any supposed cure comes with its own problems. The ECB wants banks to expand lending but now weaker banks will be told to raise their capital ratios which involves a combination of raising extra capital and reducing lending. Of course this is most likely to be taking place in the countries which are weakest and most need more rather than less bank lending. If we look at bank lending in the Euro area to businesses you can see what I mean.

The annual growth rate of loans to non-financial corporations was less negative at -2.2% in August, from -2.4% in the previous month (adjusted for loan sales

and securitisation, the rate was less negative at -2.0% in August, from -2.2% in the previous month).

In spite of extremely accomodative monetary policy supposed to boost such numbers the annual growth rate remains negative. There you have another example of the ECB finding itself between a rock and a hard place.

Let me add another factor as the benchmark consumer inflation rate used in these tests was 1.1%. Now if you consider what is a credible inflation rate forecast and the fact that it is clouded in mystery and uncertainty you see a challenge to the whole concept of a credible stress test.'

Edited by Sancho Panza

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   211 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.