Stress Test

Deutsche Bank Exec Suggests Scrapping Top Bonuses; Vows Bank Is "Better Than It Seems"

Overnight Deutsche Bank's consumer banking chief and member of its 10-member management board, Christian Sewing, told Bild that the German bank's board should discuss scrapping bonuses for top executives for a second year after Germany’s largest bank put dividend payments on hold. And since slashing bonuses tends to leave a bitter taste in the mouths of shareholders, Sewing tried to spin the recent speculation about the bank, telling Bild its "condition is significantly better than it seems."

Insanity, Oddities, And Dark Clouds In Credit-Land

Distortions in financial markets keep growing, as central banks all over the world are desperately intensifying monetary pumping. What is currently happening in various bond markets as a result of this and other interventions is simply jaw-dropping insanity. It is not so much that it defies rational explanation – in fact, all of these moves can be explained. What makes the situation so troubling is the fact that investors seem to be oblivious to the enormous risks they are taking.  They are sitting on a powder keg.

Deutsche Bank Unexpectedly Found To Have Massive Capital Gap, Larger Than Its Entire Market Cap

After the ECB concluded its latest annual stress test, which as expected found no problems with Europe's largest banks, yesterday in an unexpected outcome, German economic research institute ZEW found that Deutsche Bank had the highest potential capital shortfall, as much as €19 billion in a study of 51 European banks using U.S. Federal Reserve stress test methods. The capital gap is greater than DB's entire market cap. 

European Bank Bloodbath Destroys Stress Test Credibility

If the goal of the EBA Stress Tests was to reassure investors and regain confidence that 'all is well' in Europe's increasingly fragile and systemically interconnected banking system, then it has utterly failed. The broadest European bank stock index is now down 7% from the post-stress-test spike highs, Italian banks are at record lows and being halted (despite Renzi's promises), Commerzbank is struggling with capital raise chatter, and Deutsche Bank and Credit Suisse are tumbling after being booted from the Stoxx 50.

Italian Banks Crash Despite 'All Clear' From EU Stress Tests

For a few minutes at the open, mainstream business media persuaded itself that the EU stress tests had proved that everything was fine in Europe's banking system again. But very quickly, things went south with Italian banks - the center of the storm - reversing gains and then extending losses with Unicredit now down 8% (after being up 4%).

Euro Stocks Reverse Early Gains Dragged Lower By Slumping Banks; US Futures Flat; Crude Slides

Following last Friday's shocking weak US GDP print, Asian stocks jumped to an 11 month high on reduced prospects of a near-term rate hike, while the region also digested mostly encouraging in conflicting Chinese PMI data. European bank stocks initially rose following the release of the 2016 stress test then declined, tempering gains in global equity indexes, amid investor skepticism over the usefulness of stress-test results and weaker oil prices.

The Full Details Behind Monte Paschi's €5 Billion Bail Out

  1. Increase the coverage ratio for Bad debt
  2. Transfer all the existing stock of Bad debt into a securitization vehicle. The senior tranche will be covered by government guarantees, Mezzanine will be bought by Atlante fund and the equity tranche will be transferred to existing shareholders and deconsolidated.
  3. A €5bn capital increase to remove the negative capital impact from the operation and maintain capital level at the current level of 11.8%.

Monte Paschi Fails European "Stress Test" Meant To Restore Confidence In Europe's Struggling Banks

Moments ago, the European Banking Authority published the 2016 bank stress test results, whose purpose - as every other year -  is to inspire confidence in Europe's struggling banks; it differs from a market-based assessment of bank stress - that particular "test" can be seen by observing the stock prices of such giant banks as Deutsche Bank and Credit Suisse, both of which recently hit all time lows. As previewed yesterday, Italy's 3rd largest, and most insolvent bank, Banca Monte di Siena was the worst performer in European regulators’ stress tests, and the only lender to have its capital wiped out in the exam. 

European Bank Stress Test Preview: What To Expect And How To Trade It

While the main event in today's European bank stress test was leaked moments ago, when Monte Paschi board member Turicchi said that the bank has finalized a bank consortium for a critical capital hike, suggesting that contrary to last minute jitters the bank has found the needed number of willing banks to provide €5 billion in fresh capital it needs resulting in the bank's 3rd bailout in the past 2 years - this one courtesy of the private sector - there may still be some surprises.