Views of the "stress test" and ECB elsewhere in Europe

ECB stress test: Munich Mortgage Bank falls through - google translate] → deutsche-wirtschafts-nachrichten … llt-durch/

Unrelated more investigation and fines being lined up for Deutsche Bank

Deutsche Bank - High penalties for alleged manipulation - google translate] → faz.net/aktuell/finanzen/25- … 28574.html

Bonds: Rifts between Draghi and Weidmann, Paris and Brussels grow wider - → uk.finance.yahoo.com/news/bonds … 00856.html

25 of 130 European banks fail stress test; Ireland’s PermanentTSB fails - → finfacts.ie/irishfinancenews … 8354.shtml

Pimco’s banking expert expects 18 lenders to fail ECB stress test - → reuters.com/article/2014/10/ … 5G20141022

Lloyds Banking Group narrowly passes EBA stress test - → thehindubusinessline.com/ind … 535210.ece

Stress tests: Inconclusive EU banking probe → thecorner.eu/financial-marke … obe/41385/

Credibility meets compromise in Europe’s bank stress test - Laura Noonan → uk.reuters.com/article/2014/10/2 … PM20141020

Noonan says it’s all a sign of ‘strength’ - it’s like 2008 was all some kind of bad dream listening to these spin masters!

irishtimes.com/business/sec … -1.1977413

News Radio report on one of Germany’s higher brow radio stations seemed not particularly concerned about their own bank which was only short something like 262m and is now properly funded but more about the other banks in other counties. This was followed by report on UK’s desire not to pay more to the EU budget.

The News reports on things like these which cause instability. Germans don’t like instability even if it is somewhat remote from them. It’s like Star Wars where they sense a disturbance in the force.

Another Unbelievable Stress-Free Test; Whitewash Math and Deferred Tax Assets → globaleconomicanalysis.blogspot. … -test.html

ECB forces Germany to face up to its debts - → tradewindsnews.com/weekly/34 … -its-debts

German banks surprise after stress tests - Alice Ross → ft.com/cms/s/0/42fe9b80-5d0f … abdc0.html

German lobbing achieved the following:

  1. Property stresses on German residential mortgage portfolios much, much lower (-4.2% vs France at -28.1%) than the tests applied to other countries even though their own regulators expressed concern over a property bubble. What’s more, Commerzbank and HSH Nordbank (Deutsche Bank was forced in the end to review their mortgage book) did not have to consider loans made to homeowners as part of their asset quality review as “it would be costly to revalue their portfolios” in line with market values;
  2. German banks allowed to use discounted cash flow rather than market values for their disastrous shipping loans. Even though the ECB singled out shipping loans as among the riskiest assets on banks’ balance sheets and those most prone to misstatement by lenders (lots of off balance sheet activity in H2 2013 for ;
  3. €10b State guarantee for HSH Nordbank allowed to be used as real capital (lets ignore the €13 billion already pumped in);
  4. Contingent capital calls from German saving banks to public sector banks ignored;

Even with the above concession, German banks accounted for 7 of the 17 banks which scraped through the test with surplus capital of 1.5% or less.

Yes you are right German banks do sense disturbances in the force and their lobbyist work very effectively at sweeping the issues under the carpet :slight_smile:

Anybody know what companies and who the head persons were that assisted in these audits also is it it possible that latter have previously done a shit in the bed but would rather blame the same on the pet cat and carry on with lie?

A more positive view…

brookings.edu/blogs/up-front … ts-elliott

Tough New Rules Would Have Caused Ten More Stress Test Fails
m.wsj.com/articles/BL-MBB-28858

What happens if there is a shock before they’re “phased out” in 2019 :question:

Anyone know what kind of assets these were in BOI and AIB that were acceptable as a buffer in terms of the stress test, but inadequate in terms of the fully loaded CET1 requirements? Is there a chance that the government may step in to transform them into CET1?

I believe the Convertible bonds (CoCo) are not allowed.

For all the talk you hear on here and elsewhere in relation to the under impairment of Irish bank loan portfolios the results of the AQR won’t be substantiating the claims very much;

Allied Irish Banks: 35 bps

Bank of Ireland: 58 bps

PTSB: 29 pbs

Ulster Bank: 0 bps

Not sure what the bridge is between how they currently report in their FS (IAS 39 : incurred loss model) and the criteria for this AQR and how they will have to report in 2018 for IFRS 9 (expected loss model) but I guess the difference will be a lot more severe.

Bit disappointing then that there is not more analysis of the AQR results for Irish banks somewhere especially when the numbers are handed to the media on a plate. Bit of chit chat over on irisheconomy.ie and a few links to foreign media but havent come across the quantification of the bps reduction in relation to the CET1 anywhere. Anyone else?