Stress Test Part Two Discredited Before It Is Even Announced: All Irish Banks Pass "Comfortably"

Tyler Durden's picture

The reason we have not been covering this year's iteration of the European stress test closely (and the reason why we will not even mention next year's, if there is a Europe next year) is because it was guaranteed apriori that it would be just as farcical as its original version, and result in glaringly failing institutions in the 91-bank sample tested as "passing." Sure enough, The Independent has just reported that all Irish banks have passed the test "comfortably" - a list that includes such horrors as Bank of Ireland, Allied Irish Banks and Irish Life and Permanent Plc, which even Moody's suggested would have to fail to avoid last year's farce when AIB passed only to have to be bailed out two months later. And with that we can close the book on this year's stress test before it is even released.

From The Independent:

Irish banks are understood to have passed new European stress tests - the results of which will be published today.

The tests on 90 European banks, including Bank of Ireland, Allied Irish Banks and Irish Life & Permanent, will be made public when markets close later.

But market sources told the trio will pass “comfortably.”

The analysis is designed to assess whether the banks would have enough capital to withstand a hypothetical economic shock.

A previous probe was discredited largely because AIB, having passed the test, was two months later found to require €8bn more to keep it afloat.

This round will be more widely watched as confidence needs to be restored in the banking sector against the backdrop of growing financial woes in countries like Greece, Italy and Spain.

Analysts expect between five and 15 European banks to fail the tests with some regional German institutions considered the most vulnerable.

The number of banks was originally 91.

However, German bank Helaba pulled out on this week as part of a dispute the European Banking Authority and it will announce results separately.

Expect a knee jerk reaction higher in the euro, and thus the S&P, once results come out "better" than expected. Our only question is how long will the half-life be before the next round of dumping begins, or said otherwise, how long before everyone "Sells the Farce."

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malikai's picture

Autofellatio at its best.

markmotive's picture

The smartest man in Europe owns gold.

Who am I to argue with the smartest man in Europe?

TheFourthStooge-ing's picture

Stress Test? They're playing a game of charades with PIIGS.


schismjism's picture

Top o' the mornin' to ya!

qussl3's picture

Fucking idiotic to test for robustness when exposed to a hypothetical economic shock, when the most likely shock is the failure of the institutions themselves.

Not to mention NOT testing for sovereign default, when that is precisely the most likely trigger for any fun and games.

This is nothing more than a setup to sucker in some dipshit bagholders, which dumbass SWF will step up?

LMAO's picture

"which dumbass SWF will step up?"

The Norwegian?

They'll do about anything chasing yields. Risk management, is not a topic.

Although arguably we are in the middle of some "diversification" of the SWF portfolio by buying up top notch real estate in Paris, London and anywhere else (after all the Commercial/Real Estate market has bottomed and is making a blistering post recession comeback, right?) I expect them to do anything in their power to bailout the banksters. Stoltenberg has already been hinting "more bailout money to come" for his Norwegian banking friends, on the first signs of weakness .




swissinv's picture

at then end of the day it's anyway all about liquidity and not capital

Ghordius's picture

So what?

The previous Irish Government bailed Anglo-Irish out, brought Debt/GDP from 40% to over 100%.

The current Irish Government did nothing, which is IMO the same as fucking the Irish People/Taxpayers.
For the second time.

So what are the chances that any Irish Bank won't be bailed out? Zero. Give them AAA and leave them rot.

ZH: there will be a new year for Europe next year. Looked up in the calendar. It's there.

Silverhog's picture

Great driver, guaranteed to run like a clock. No need to look under the hood, trust me.  

StormShadow's picture

Arrgghh, whose been luckin in me pot 'o gold!! Tis full I tell ya, full to the brim. Stare at the the pratty rainbou and be on ya marry way, Lad!

Lord Welligton's picture


Irish Life and Permanent is already known to require €4bn in equity.

It is insolvent.

A large chunk (don't know say 40%) of its mortgage book is linked to the ECB rate (trackers) but their cost of funds is far higher (don't know how much higher).

They are losing money hand over fist.

sangell's picture

The Irish Central Bank can whip out another 50 billion Euros in ELA anytime it wants backed by the full faith and credit of something or other so why aren't Irish banks well capitalized?

wandstrasse's picture

All these stress tests are really tough and serious - FOR ME. My farce-tolerance-o-meter is at its limit.

THE DORK OF CORK's picture

These are not banks as defined by the more convential modern terms.

They are safety deposit boxes that are being drawn down to pay external sovergin debt.


TheFourthStooge-ing's picture

These are not banks as defined by the more convential modern terms.

They are safety deposit boxes that are being drawn down to pay external sovergin debt.

I'd even go so far as to say they are collection points for tribute paid to foreign masters.


centerline's picture

Did anyone expect anything different?  Pass = fail.  And leaves the general population confused - not knowing who to believe.  Of course, thier intuitions tell them the tests are bogus and the banks are insolvent - but the ability to process this "feeling" has been beating out of them over the years.  And only a few people (not enough) have any clue the shitstorm that is coming as a result.

Sambo's picture

How long can the world tolerate this kind of blatant cheating?

The banks are not serving money, the money is serving banks.

StormShadow's picture

News flash: Red Cross now including free jar of Vaseline with every aid package.

Sudden Debt's picture



Buy whoever does the tests or is involved should be shot if it turn out that they don't.



pods's picture

This is not surprising in the least bit.  They need the banks to be solvent, bam, they are solvent.  

I imagine some of QE2s loot got sloshed around to keep everyone happy.

Was anyone really thinking that the people who run the game were going to sell out themslves?


PulauHantu29's picture

I iwsh these guys had written my Final Exams in school.......

Problem Is's picture

We Learned Years Ago
From Wanker Timmay that all stress tests of Banksters are bullshit...