Eight Banks Fail EU Stress Test with 16 in Danger Zone

Feuer Frei! · 07-16-11, 05:07 AM

Eight out of 90 European banks have failed stress tests designed to ensure they can withstand another financial crisis.
The European Banking Authority (EBA), which carried out the healthcheck, said another 16 banks were in the danger zone.
The EBA called on national financial regulators to ensure that capital shortfalls would be quickly resolved.
Five Spanish banks failed, as well as one in Austria and two in Greece.
On Wednesday, Germany's Helaba pulled out of the stress tests, effectively making it the ninth bank to fail.
In Austria, the Oestereichische Volksbank failed the test, while in Greece two state-controlled banks - ATEbank and EFG Eurobank - fell at the hurdle.
In Spain, Catalunya Caixa, Pastor, Unnim, Caja3 and CAM failed, with seven others just scraping through the test.

However, Bank of Spain governor Miguel Angel Fernandez Ordonez said there was no need to inject further capital into the banks as the sector was already undergoing a fundamental restructuring.
The EBA added that 16 banks only just passed the tests. All the banks should "promptly" take steps to strengthen their financial cushion, the EBA said.
After the EBA announcement, the Bank of Portugal said two of the country's banks would immediately begin bolstering their finances.
Banco Comercial Portugues, the country's largest listed bank, and Espirito Santo Financial Group, will strengthen their balance sheets within three months.
Debt-heavy Portugal took a 78bn euro (£68bn) bail-out earlier this year. Its economy is forecast to contract 4% over the next two years.
The news came just as Italy's parliament approved a 70bn euro austerity package. The country's central bank said that all Italian banks had passed the tests with "an ample margin".

A key benchmark for passing the test was whether the banks have at least 5% "core tier 1" capital, which describes the best form of capital a bank can hold to make up any losses.
One analyst told the BBC that, while some people would find the results reassuring, others would see them as evidence that the tests were not credible.
He said that demands from the financial authorities that banks began immediately to bolster their core capital "is an acknowledgement that there is a risk of sovereign default".
The failed banks would have to find an estimated 2.5bn euros in new funding by the end of the year, he said.

The tests are a key element in fighting Europe's debt crisis, intended to identify weak banks and ensure they are made robust enough to survive a possible default on government bonds by heavily indebted countries such as Greece.
However, the tests did not consider the impact of Greece defaulting, something some analysts believe is increasingly likely.
There have been concerns, including from the ratings agency Standard & Poors, that the tests were not strict enough. However, the EBA said they were more stringent than those it carried out last year.
In 2010, both Irish banks tested, Bank of Ireland and Allied Irish Bank, were given a clean bill of health. But just months later, AIB needed a government bail-out.
Each country's national banking regulators carried out a test that simulated what would happen to a bank's finances during a recession where growth falls more than 4 percentage points below EU forecasts.
On Wednesday, German bank Helaba withdrew from the stress tests to avoid public failure.
It said it would have passed the test if regulators counted a debt-equity hybrid, called "silent participation", as a capital reserve, but the EBA, having initially said it would accept this, then changed its mind.
"Under the EBA conditions the bank failed, that is clear," Helaba spokesman Wolfgang Kuss told the AFP news agency on Friday. "From our point of view we were successful," he added.

SOURCE

07-16-11, 05:16 AM

I'm gad the Eurozone ends at the german border.
The Krone suits me just fine, thanks.

Skybird · 07-16-11, 05:25 AM

That "stress" test means nothing, because it has not tested for real stress. No politician in a European government or EU institution would ever agree to or allow a test of banks being run so that it really puts them under real "stress" and runs the risk of seeing them, and with them parts of the whole system, collapsing. This testinmg now was designed to be sufficiently harmless so that it would deliver the politically demanded result.

It is deceiving the voters at home. Not one bit more.

And now, beloved boys and girls, will you please believe the brave Euroticians and go to your banks and buy those f%§$?'$g bonds of theirs immediately, yes?

Skybird · 07-16-11, 05:27 AM

Quote:

Originally Posted by Snestorm

I'm gad the Eurozone ends at the german border.

As a German I would love if we were able to say that, too!

Feuer Frei! · 07-16-11, 05:28 AM

Quote:

Originally Posted by Skybird

That "stress" test means nothing, because it has not tested for real stress.

Analysis rather then Stress Test, a better choice of words perhaps.

Skybird · 07-16-11, 05:38 AM

Quote:

Originally Posted by Feuer Frei!

Analysis rather then Stress Test, a better choice of words perhaps.

Wordgame. The criterions by which it is being done, are the decisive thing, and these excluded really critical scenarios and factors from beginning on, by political pressure. It cannot be what should not be.

STEED · 07-16-11, 06:27 AM

I smelled a rat with the choice of words and the above has proven it.

Jimbuna · 07-16-11, 06:45 AM

Quote:

Originally Posted by Skybird

Wordgame. The criterions by which it is being done, are the decisive thing, and these excluded really critical scenarios and factors from beginning on, by political pressure. It cannot be what should not be.

I tend to agree...it is okay to drum up a hypothetical situation and choose the benchmarking criteria to be used that I suspect is politically motivated/acceptable.

The here and now reality was not included as part of the process, namely...

Quote:

However, the tests did not consider the impact of Greece defaulting

joegrundman · 07-16-11, 07:06 AM

still not everyone agrees with the profound wisdom of subsim commenters

this article suggests the stress test has been of some value

http://blogs.channel4.com/faisal-isl...just-yet/14404

07-16-11, 11:37 AM

getting truth out of a politician is like pulling hens teeth

STEED · 07-16-11, 02:09 PM

Quote:

Originally Posted by sidslotm

getting truth out of a politician is like pulling hens teeth

Jimbuna · 07-16-11, 03:08 PM

Quote:

Originally Posted by sidslotm

getting truth out of a politician is like pulling hens teeth

Would this be the 'profound wisdom' I've read of or simply the view of someone 'profoundly wise' ?

andritsos · 07-16-11, 03:33 PM

apart this i am especiallty worried about the 2 greek banks , due to the fact that greek media told us days ago that all greek banks passed the stress test

while here its tsated that they didnt manage well . actually i remembered what greek media told tehn when navigating at aljazeera for example ( about the banks that failed) and it raised me many doubs of who to trust

. i even checked at an online version of a popular greek newspaper
( www.tanea.gr)
(http://www.aljazeera.com/news/europe...926820778.html)
i dont know how the situation will develop if we get false data
here is link : http://www.tanea.gr/oikonomia/article/?aid=4642877
EDIT: here greek writing is not recognised . well there is the first part that says that the main greek banks (ethinikh trapeza, alpha bank, eurobank, pireus bank, ATE bank etc have passed the test stress testing)
my gosh

just to say that during 2009 years greek banks actually had near half of greek dept in revenues ( i dont have a clear source for this, i will be pleased if someone here has one)

07-16-11, 05:07 AM	#1
Feuer Frei! Navy Seal Join Date: Sep 2009 Location: Valhalla Posts: 5,295 Downloads: 141 Uploads: 17	Eight Banks Fail EU Stress Test with 16 in Danger Zone Eight out of 90 European banks have failed stress tests designed to ensure they can withstand another financial crisis. The European Banking Authority (EBA), which carried out the healthcheck, said another 16 banks were in the danger zone. The EBA called on national financial regulators to ensure that capital shortfalls would be quickly resolved. Five Spanish banks failed, as well as one in Austria and two in Greece. On Wednesday, Germany's Helaba pulled out of the stress tests, effectively making it the ninth bank to fail. In Austria, the Oestereichische Volksbank failed the test, while in Greece two state-controlled banks - ATEbank and EFG Eurobank - fell at the hurdle. In Spain, Catalunya Caixa, Pastor, Unnim, Caja3 and CAM failed, with seven others just scraping through the test. However, Bank of Spain governor Miguel Angel Fernandez Ordonez said there was no need to inject further capital into the banks as the sector was already undergoing a fundamental restructuring. The EBA added that 16 banks only just passed the tests. All the banks should "promptly" take steps to strengthen their financial cushion, the EBA said. After the EBA announcement, the Bank of Portugal said two of the country's banks would immediately begin bolstering their finances. Banco Comercial Portugues, the country's largest listed bank, and Espirito Santo Financial Group, will strengthen their balance sheets within three months. Debt-heavy Portugal took a 78bn euro (£68bn) bail-out earlier this year. Its economy is forecast to contract 4% over the next two years. The news came just as Italy's parliament approved a 70bn euro austerity package. The country's central bank said that all Italian banks had passed the tests with "an ample margin". A key benchmark for passing the test was whether the banks have at least 5% "core tier 1" capital, which describes the best form of capital a bank can hold to make up any losses. One analyst told the BBC that, while some people would find the results reassuring, others would see them as evidence that the tests were not credible. He said that demands from the financial authorities that banks began immediately to bolster their core capital "is an acknowledgement that there is a risk of sovereign default". The failed banks would have to find an estimated 2.5bn euros in new funding by the end of the year, he said. The tests are a key element in fighting Europe's debt crisis, intended to identify weak banks and ensure they are made robust enough to survive a possible default on government bonds by heavily indebted countries such as Greece. However, the tests did not consider the impact of Greece defaulting, something some analysts believe is increasingly likely. There have been concerns, including from the ratings agency Standard & Poors, that the tests were not strict enough. However, the EBA said they were more stringent than those it carried out last year. In 2010, both Irish banks tested, Bank of Ireland and Allied Irish Bank, were given a clean bill of health. But just months later, AIB needed a government bail-out. Each country's national banking regulators carried out a test that simulated what would happen to a bank's finances during a recession where growth falls more than 4 percentage points below EU forecasts. On Wednesday, German bank Helaba withdrew from the stress tests to avoid public failure. It said it would have passed the test if regulators counted a debt-equity hybrid, called "silent participation", as a capital reserve, but the EBA, having initially said it would accept this, then changed its mind. "Under the EBA conditions the bank failed, that is clear," Helaba spokesman Wolfgang Kuss told the AFP news agency on Friday. "From our point of view we were successful," he added. SOURCE __________________ "History is the lies that the victors agree on"- Napoleon LINK TO MY SH 3 MODS

07-16-11, 05:25 AM	#3
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,604 Downloads: 10 Uploads: 0	That "stress" test means nothing, because it has not tested for real stress. No politician in a European government or EU institution would ever agree to or allow a test of banks being run so that it really puts them under real "stress" and runs the risk of seeing them, and with them parts of the whole system, collapsing. This testinmg now was designed to be sufficiently harmless so that it would deliver the politically demanded result. It is deceiving the voters at home. Not one bit more. And now, beloved boys and girls, will you please believe the brave Euroticians and go to your banks and buy those f%§$?'$g bonds of theirs immediately, yes? __________________ If you feel nuts, consult an expert.

07-16-11, 06:27 AM	#7
STEED Lucky Jack Join Date: Jan 2006 Location: Down Town UK Posts: 27,695 Downloads: 89 Uploads: 48	I smelled a rat with the choice of words and the above has proven it. __________________ Dr Who rest in peace 1963-2017. To borrow Davros saying...I NAME YOU CHIBNALL THE DESTROYER OF DR WHO YOU KILLED IT!

07-16-11, 07:06 AM	#9
joegrundman Ocean Warrior Join Date: May 2007 Posts: 2,689 Downloads: 34 Uploads: 0	still not everyone agrees with the profound wisdom of subsim commenters this article suggests the stress test has been of some value http://blogs.channel4.com/faisal-isl...just-yet/14404 __________________ "Enemy submarines are to be called U-Boats. The term submarine is to be reserved for Allied under water vessels. U-Boats are those dastardly villains who sink our ships, while submarines are those gallant and noble craft which sink theirs." Winston Churchill

07-16-11, 05:16 AM	#2
Snestorm Stowaway Posts: n/a Downloads: Uploads:	I'm gad the Eurozone ends at the german border. The Krone suits me just fine, thanks.

07-16-11, 11:37 AM	#10
sidslotm Stowaway Posts: n/a Downloads: Uploads:	getting truth out of a politician is like pulling hens teeth

07-16-11, 03:33 PM	#13
andritsos Gunner Join Date: Mar 2010 Posts: 92 Downloads: 71 Uploads: 0	apart this i am especiallty worried about the 2 greek banks , due to the fact that greek media told us days ago that all greek banks passed the stress test while here its tsated that they didnt manage well . actually i remembered what greek media told tehn when navigating at aljazeera for example ( about the banks that failed) and it raised me many doubs of who to trust . i even checked at an online version of a popular greek newspaper ( www.tanea.gr) (http://www.aljazeera.com/news/europe...926820778.html) i dont know how the situation will develop if we get false data here is link : http://www.tanea.gr/oikonomia/article/?aid=4642877 EDIT: here greek writing is not recognised . well there is the first part that says that the main greek banks (ethinikh trapeza, alpha bank, eurobank, pireus bank, ATE bank etc have passed the test stress testing) my gosh just to say that during 2009 years greek banks actually had near half of greek dept in revenues ( i dont have a clear source for this, i will be pleased if someone here has one)