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Stress Test 2 Results Are Out: 8 Banks Fail - 5 Spanish, 2 Greek, 1 Austrian
The farce continues: Moody's predicted 26 failures, Eurostat gives us 8. EBA says 5 Spanish, 2 Greek, 1 Austrian Bank fail as of April 30; EBA says 7 Spanish, 2 German, 2 Greek, 2 Portuguese barely pass. EBA says 16 of 90 banks had core capital of 5% to 6% and will have to take action to improve capital buffers. EBA says EU banks average CT1 7.7% in adverse Scenario, as of April 30. Looking forward to next year's Stress Test. As expected, risk is broadly on in the EUR, as the "sell the farce" moment approaches. The reason why the bank rollover is so urgently pushed is because two
thirds of all Greek debt is held by Greek banks who then pledge it back
to the ECB at par. Specifically, 67% of Greek debt is held by Greek
banks, 9% by German banks, and 8% by French banks. Then these same Greek
banks that "roll" their Greek sovereign debt receive even more cash
handouts from the Greek central Bank, which in turn is funded from the
ECB. Biggest Ponzi clusterfuck ever.
The banks that have failed are Spanish: Unnim, CAM, Catalunyacaixa, Banco Pastor, Caja3, Greek: Eurobank, Atebank, and Austrian: Volksbanken.
The reason why the bank rollover is so urgently pushed is because two thirds of all Greek debt is held by Greek banks who then pledge it back to the ECB at par. Specifically, 67% of Greek debt is held by Greek banks, 9% by German banks, and 8% by French banks. Then these same Greek banks that "roll" their Greek sovereign debt receive even more cash handouts from the Greek central Bank, which in turn is funded from the ECB, while at the same time providing collateral to the standalone banks. Biggest Ponzi clusterfuck ever.
Among the funniest news is that the total capital deficiency is just $3.5 billion:
Eight banks failed the European Union stress tests after regulators said they had a combined capital shortfall of 2.5 billion euros ($3.5 billion).
The banks were found to have insufficient reserves to maintain a core tier 1 capital ratio of 5 percent in the event of an economic slowdown, the European Banking Authority said.
The assessments are the first by the European Banking Authority since it was set up earlier this year. Last year’s tests by its predecessor were criticized for not being tough enough because banks were shown to need only 3.5 billion euros more capital, a 10th of the lowest analyst estimate. Banks that fail the stress test must present a plan to raise more capital within three months.
“Any institution failing the stress test could be left facing funding challenges, the potential loss of stakeholder confidence and the risk of a credit-rating downgrade,” Steve Pearson, a partner at PricewaterhouseCoopers LLP, said in a note to clients. “Experience has shown the premium the riskier institutions might have to pay to retain some of their depositors could increase to an unsustainable level.”
Here is the joke of an assumption in sovereign bond valuation haircuts in the Adverse scenario which was not used. Greece peaks at 29.5%: its CTD bonds already trade with a 50% discount. Tragic.
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...and the algos go crazy :))
Nothing like old news, and old bad news to boot.
Let's try again.
How about scratching, as in below the surface?
Something like the ONE Spanish bank (the other four were low end "Cajas") that didn't make it because some convertible bonds weren't included in the analysis (which means that ONE Spanish bank really passed . . .).
Or how about the fact that 95% of the Spanish banking system was examined, while in Germany that figure was around 60% (ahem, which means that 40% of the German financial is a big fat N/A).
Or how about . . .
There's a shitload of real news out there if you bother to get off your ass (that's not directed just to ZH, rather it goes to all you oh-so-well informed readers - how in the hell do you make investment decisions with the horrible information you have, I'll never know - and the the rest of the U.S. bloggers/media/general populace/etc. How can you settle for such superficial crap?
What is the ratio of Banks to Cajas? Are Cajas backed stopped by the banks?
hooray! viva le banque! lez bitchez
OOOOoooooooOOOOOOOOOOoooooooooooooo
how tense.
These guys just can't stop lying. No one except the robots, and even they are having doubts, believe a word they say.....
Landesbank Hessen-Thueringen, known as Helaba, refused to allow the EBA to release its stress-test data
The European Union plans to force banks to disclose how they fare in future stress tests to prevent any repeat of the last-minute withdrawal of Germany’s Landesbank Hessen-Thueringen from this year’s exams.
Lulz! Not one single Italian bank. This thing is so freaking hilarious that I would be laughing if it wasn't so terrible executed. For the countries they listed, one must remember to apply the times 2 rule to actually give the results some credibility.
Credibility? You can't trade credibility, therefore credibility is irrelevant.
Now, if you would offer complex options on it, then you could....
A whole new interpretation for the BS PDE!
If you havn't seen this yet...sums it up in 2.5 min...and it's a riot!
http://www.youtube.com/watch?v=I5QwKEwo4Bc
Or maybe the credibility problem belongs to the loser U.S. rating agencies and those who pay attention to them?
Get with it people. You're on a sinking ship, and its name isn't Europe.
The Euro politicians are sticking faithfully to Goebbels' dictum about telling a lie big enough and repeating it often enough. They seem remarkably unaware that the vast gulf between reality and the picture they are trying to paint is plainly visible to all, and they are just making themselves look ridiculous.
good one
Hate me if you want, I still say that the Bank Bailout Age in Europe is over.
The risk is not on the EUR, it's on the banks. Yes, this means bank runs in the EU, eventually...
G , you are not wrong. But dont limit the bank runs to EZ. Youre going to see GLOBAL , yes GLOBAL panic on deposits. Those who dont panic in time will find out just what happens to depositors in a ponzi scheme. Once the capital controls go into full retard mode it will be too late to get onto a lifeboat.
"They" would never let ANY "Important" bank fail! No! Never! Hehehhe:))))))))
...imagine if us poor, broke US taxpayers didn't flood the Eurotrash Bins, I mean banks with 850 Billion Dollars.
...is this the moment to beg you to give us Timmy and the Bernank?
Please send them over on this side of the pond, pretty please...?
...wait, my medication is not working anymore.
Here's the deal: keep them and we will send you a 850 quadrillions USD in ten years.
Yea, dude...you get back on that medication of yours.
Fx in the EUR - selling the news
The farce is strong with this one...
What a beautiful outfit the Emporer has!!
He was born with it.
Meanwhile..
IMF Note on Global Economic Prospects and Policy Challenges.
http://www.imf.org/external/np/g20/070911.htm
If this is not stressful, why call it a stress test?
Lets call it comfort test.
Well that was easy to show the problem, per the report above
Since when did anyone have to take a haircut?
Reggie Middleton's suggestion that these stress tests will prime the Old World for a first ever pan-Euro bank run may be correct. A slow motion bank run is happening anyway.
It's all candy canes and rainbows. Time to saddle up the unicorn and ride the wave of euphoria.
Nice username.
Sincerely,
Hugh Jazz
Mike Hunt
Mike Hock
Anita Blochob
Iwe Toddid
Don't forget the sunshine, flowers, sparkling spring water , and the girls dancing in the grassy fields with a soft gentle breeze blowing up their skirts. I cant believe that the shit is hitting the fan all at the exact same time in Europe and in the US.
EU-propaganda is getting so ridiculous it's not funny anymore...
and some more...
07-15 12:14: ECB's Ordonez says no Spanish bank must raise capital due to testsFortunately the tests takers didn't account for what might happen if Greece or another Euro-zone country defaults on its debts.
Why aren't European stocks lock limit down?
Because it's Friday evening and the exchanges are all closed?
News that could "distort" the markets in Europe are usually given after the exchanges are closed.
Precisely.
Mild Cognitive Impairment...
ALL the irish banks passed the first stress test....joke...Robot....please....get a fucking grip....Not one bank in Portugal either...you fucking kidding me....
ALL the irish banks passed the first stress test....joke...Robot....please....get a fucking grip....Not one bank in Portugal either...you fucking kidding me....
Because youre short?
Duhhhhhhhh
I don't need a test to tell me I'm under stress.
rating absolute shit AAA. Now that's credibilty
So hands up who wants to buy into the 2.5bil Euro of rights issues coming out of BK EZ banks? How tempting!
indeed, the stress tests are farce. glad i ramped up with bullion purchases of silver and gold on the pull back and retrace. helps sleep easier at night.
So much for the stress test rally.
Unnim, Caja3, Banco Pastor, CatalunyaCaixa and CAM (yes, as in cam) were the Spanish banks and saving banks which failed the stress tests.
Edit: Seems that Tyler edited the post already with all the info.
I'm still baffled why BBVA and STD are not limit down today.
Yet they still have dividend yields of 9% - 11%, and no announcement of a dividend cut yet.
Simply because their activity is not 100% focused in Spain, in fact Santander is highly exposed to emerging countries such as Brazil, and even in the only country which didn't fall into recession in 2008-2010 in Europe: Poland.
The Brazil miracle is in general is tied in as a supplier to the China economic story. The saving grace so far has been elevated commodity prices, but that hasn’t staved off one the biggest consumer bubbles in the emerging markets. This FT.com article covers the basics, consumer debt service in Brazil has exploded to 28% of disposable income (compared to 16% in the US) , and delinquencies are spiking as well, from 7.8% at the end of 2010, to 9.1% in May. This one will blow up fast at the first blush of a commodity downturn.
They are propped up by taxpayer money and the IMF; markets broken.
BAC from $15 to $10 in a few months yet XRT has rallied from $15 to $54 the last few years with no weakness whatsoever?
You're 'baffled' by it all? Quit sounding like a retard and maybe get more respect around ZH.
As Sinclair would say: MOPE
No Irish banks? Maybe they don't call them banks. What do they call a bank when the country takes them over?
Skanks?
The Ministry of Truth couldn't say anything negative here.
I knew I should have bought ire @.85 yesterday. Very nice algo work going on with that one. What a total POS!
Liesman on CNBC was trying to get the top "porter" position emptying the bedpans on the Bernakocopter.
He may not be following ZH. I doubt the current bernakocopter is trans-ocean capable after the newly released spy footage released by WB7.
In other news. The teleprompter in cheif announced earlier today that he might not watch Fox News on Cable, but he supports their ability to receive transfer payments from Americans who did not get an LLM Tax degree. Keep sending those kids to college folks!
reminder: market is rigged. buy physical PM and sleep well.
Eurobank EFG fails stress test....
Them Euros don't know how to properly design a stress test, obviously. The entire objective is to make sure no one fails.
Duhhhh....
So if Moody's had chalked up 26 banks to fail and only 8 'really did', I guess now Moodys goes on a downgrading rampage?
sure glad i don't have to sweat out the weekend with std, et al in my portfolio.
what a joke. The "Euro" is a piece of crap. Expect this "currency" to fall like a stone.
Wow, so poor they couldn't even raise bribe money to the rater like their fellows? Must hae been a huge payoff to get that doubleplusgood rated "probably won't fail today"
The more of these tests they put out the less credibility they get even if they raise standards of the tests.
What is really getting tested here are people's credibility not the banks.
I'm wondering if anyone in Europe has been buying LULU outfits and iPads? Both stocks seem bulletproof during the worst recession and banking crisis in decades.
I bet lots of guys are hiding out in these stocks and have outsized positions.
One day the party will be over, but when?
Barely passable is not where you want to be with a contracting economy. I say add them to the failed list with an asterik saying "Coming Soon"
How are they gonna keep moving the goal post when theres more than one ball in the air?
"Failures"
are these "hard' failures....or "soft" failures?
Of course. For ZH, a shitty rating agency that is still giving AAA to U.S. is more credible than whatever comes from Europe (that you admited you don't have a clue about).
It is one of the commandments of being American. If USA is crap, every other nation must be crappier or they cheated!
Bravo, re: US AAA.
It's both worse and better than I thought. Only 8 banks out of 90 failed (One German bank, Helaba withdrew from the test), but 16 are in the danger zone criteria, and it's not as if 5% CT1 is an impossible target! Total makes 25, which oddly enough is almost exactly what Moody's predicted. Smells like my girlfriend after a few days without showering. Distinctly fishy.
Only 30 banks have assessments twice a year, and although most have expressed bolstering funds, one has to wonder where it's going to come from? The 8 banks have to find 2.5Bn € within 5 months, and there's fat chance that all 90 banks will undergo the stress test again any time soon.
Edit: Missed the failed banks list the first time in the article, but I see it now.
it seems unreasonable to me to fight the tide of insolvency vis-a-vis the banks. it seems to me a rationale investor would simply take the high road and buy physical silver and gold bullion rather than risk one's wealth with the likes of bank stocks, which if the worst turns out accurate could be bought for pennies on the dollar down the road.
Do you really believe what a prostitute would tell you?
the captial requirement calculations are a joke..there are so many conditions/exceptions in there the the ultimate % is on a very small number.
Banks however make a big noise about it to show how difficult it is for them to maintain this number, while in fact it is not that big.
This is just to fool the public.
This is patently wildly optimistic nonsense.
The Irish Banking system is in a coma and being held on life support by the ECB, yet it has just been given the ok to run a marathon if it takes on plenty of fluids. How does that work?
Oh no!
Quick!
We need more working middle class assets and fast!
Austerity!
Increase fees!
Raise taxes!
More robosigning!
The banking elite and politicians must be saved!
(We're doing it for the children, really).
Didn't we learn years ago from Wanker Timmay that all stress tests of Banksters are bullshit?
The assumptions are there for everyone to see. In that sense of course, they are bullshit. What's important are the declared balance sheets of those who participate (key words: those who participate). Then the assumptions are there to plot a plausible scenario, as can be done with any company, or economy for that matter. Again what's important is the declared financial condition to begin with. And that ain't bullshit.
A joke, a joke big time.