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How Oliver Wyman Manipulated The Spanish Bank Bailout Analysis

Tyler Durden's picture





 

The biggest (non) news of the day was Oliver Wyman ("OW") conducting an "independent" audit of the Spanish banking system to validate the previously disclosed funding needs of Spain's banks which were announced back in June (just a week after Mariano Rajoy "insisted" no bank bailouts are needed). What OW really did was exercise 1 in a financial analyst's playbook: to goal seek a number in excel using a variety of input variables, especially several fudge factors that are tangential to the matter at hand, yet which provide the biggest bang for the buck. In this case the target of the goalseeking exercise was to get a final headline number for bank capital needs to be just as expected, or €60 billion. Sure enough it the number was €59.3 billion, just a little bit less than consensus. This is the total number of cash the bank system will need in order to be considered viable, and unless something has changed drastically, the cash will come from new debt issued by Spain, which in turn funds its bank bailout fund, the FROB (a process explained here). While it is a given that several months from now we will go through this whole entire exercise to find out how much more cash Spain's banks will need, for now what is curious is to understand what the fudge factor was that OW abused to allow it to get the desired result. That fudge factor is what is known as "excess capital buffer", whose usage in the model to plug a major capital shortfall gap is non-sensical and shows that the real funding needs of Spain's banks will be far greater, even absent future deterioration.

What is the excess capital buffer?

First, here is a chart showing the walkthru of the entire exercise.

In the OW report, the consulting company which is happy to goalseek any result requested of it by its client, shows that total projected losses for all Spanish banks, not just those who are now nationalized, under the adverse scenario will be €270 billion. The question then is how to plug this hole. First, Spanish banks have already taken €110 billion in provisions. Next, OW estimates that somehow Spain's banks can generate profit to the tune of €59 billion, which together with a government-backed loss backstop called "Asset Protection Schemes" in place for BBVA, Liverbank and Sabadell amounting to €8 billion, brings the capital deficiency hole to €93 billion.

Now if it wasn't for the excess capital buffer, this is the total amount of new capital that banks would have to raise: a number which the market would have thrown up on, as it would effectively raise Spain's official debt/GDP by an additional ~15%. But thanks to the magic of excel, and consultants of dubious ethical standing, we get what is known a fudge factor.

What is the formal definition of the Capital Buffer. Here it is from pages2 and 53 of the OW report:

To improve the quality of the projected loss absorption, we...utilized a structured approach to model the additional capital buffer resulting from deleverage, by estimating RWA reductions in line with projected entities’ credit volumes by asset type in each scenario.

...

The capital buffer is the excess available capital above the requirements set for the purpose of the bottom-up stress testing exercise. As defined by the Steering Committee, post-shock capital needs are estimated taking a minimum Core Tier 1 ratio (as defined by the EBA) of 9% and 6%, under the base and the adverse scenarios respectively.

 

Credit deleverage has the effect of reducing an entity’s total risk-weighted assets (RWAs) and subsequently, capital requirements. This RWA reduction reflects the current specific asset mix of each entity and their growth strategy in different credit segments.

To simplify, what OW has done is to assume that as the situation deteriorates, whether in the base or adverse case, Spanish banks will sell debt, in the process reducing capital requirements, which implicitly makes sense: less debt, less equity needed to support it. Keep that in mind for now.

So the first thing that is surprising about the capital buffer is the following disclosure in the report:

Capital buffer generates approximately €73 BN of extra loss absorption capacity in the adverse scenario (€22 BN in the base scenario)

This is curious. It basically means that in the worst case scenario, it is assumed that Spain's banks will sell much more debt, ostensibly hundreds of billions worth, in order to get the benefit of Core Tier 1 deleveraging. Visually this is shown as follows:

So basically what OW, Spain, and all those who have endorsed this report and its findings, among them the IMF and the ECB, are saying, is that as the situation gets worse, Spanish banks will delever. In fact, they will delever in the adverse case to an amount that on a consolidated basis fress up more capital (€73 billion), than the entire capital shortfall under the same scenario at €60 billion. This also implies that the total amount of deleveraging is in the hundreds of billions (also keep this number in minds).

That this is the deus ex fudge used by the European brain trust is simply laughable as it raises several quite hilarious questions, the first one being: just whom will these Spanish banks sell said debt to?

Since we are talking adverse case, in which the Spanish economy is imploding, GDP is crashing, and unemployment is soaring, one can assume an ongoing global deflationary deleveraging is the general context assumed by the authors. That someone under these circumstances would offer a bid, any sensible bid to a Spanish bank system which is now known will have to sell should things get far worse, and thus hit any bid, is simply laughable and shows how little understanding of actual capital markets consultants have. In short: in having to sell debt in the open market to mitigate capital requirements, Spanish banks would have to suffer massive P&L hits, which since all this debt, the bulk of which is Spanish sovereign debt to begin with, is market at par would lead to crippling Income Statement losses. Naturally, P&L losses would then make their way to the balance sheet and annihilate all of those €59 billion in OL assumed profits that offset the €270 billion in total future losses. In fact, should Spanish banks have to dump hundreds of billions in debt, and hit any bid, the total losses would be order of magnitude bigger than just €270 billion.

But a far bigger issue is the following. We will let readers figure it out using the chart below:

The chart above simply shows what the complete liquidity needs of the Spanish banking system are, far beyond and above what the Stress Test is calculating for. It shows that in August, the ECB, via any of its numerous funding vehciles, had funded Spanish banks to the tune o a record €412 billion. Why so much? The reason is Exhibit A of just why the Spanish banking system is doomed: the endless and relentless deposit outflow, which we noted yesterday. Here is the chart again in all its glory.

Since bank deposits are bank liabilites, the constant outflow of deposits means three things:

i) either the banks have to generate profits and thus increase shareholder equity, to offset the loss in liabilities, which in the current environment will never happen, or

ii) they have to sell assets, which in the current massively mismarked environment would also never happen as the banks would then have to take great unprovisioned losses on these asset sales, in the process generating greater losses to equity, than offsetting cash creation, or

iii) and this is precisely what is happening, pledge assets (and potentially re-pledge and re-re-pledge using rehypothecation) to the ECB in exchange for cash via any of the generic funding conduits such as the MRO and LTRO.

And that's precisely where the paradox lies:

What Oliver Wyman is suggesting is that Spanish banks can plug capital shortfalls, modestly in the base case, massively in a worst case environment, by selling hundreds of billions of the very debt they use to pledge as collateral with the ECB! What this means of course, is that as the inventory of dry powder of eligible collateral declines (because the ECB will accept any bank assets, regardless of how worthless it is in exchange for 100 cents on the euro), the ability of the ECB to fund ongoing deposit outflows is eliminated.

And therein lies the Catch 22. Because unless the bank runs are halted, and the need for liquidity from some source, i.e., the ECB, ends, the Spanish banks will need more not less debt on their balance sheets! It certainly means that in reality none of that €73 billion in benefits from "excess capital buffer" will ever become available to the banks. But what it most certainly means is that if someone were to sit down and think through the logic of the OW bailout schematic, the real capital needs for Spain's banks would far, far, greater, which in turn would crush any residual confidence in the system, which in turn would send the bank runs into overdrive, which in turn would guarantee the imminent collapse of the entire Spanish system, and with it the state of Spain, and thus the ECB and the Eurozone.

Is the picture emerging now?

Of course, all of the above has to be avoided at all costs, which is precisely why OW did what it did, why it fudged the numbers the way it did, and why the Eurozone, the IMF and the ECB rushed to give their seals of approval to an analysis which cracks after 15 seconds of critical thinking. But at the end of the day it is all about confidence, and the last thing the people of an entire insolvent world continent can afford is the truth.

Finally, and the biggest irony of the entire farce that is the Oliver Wyman analysis, is the unexpected sideffect of their conclusion which has more capital being formed for three of Spain's banks, Santander, BBVA and Bankinter under the Adverse scenario than under the Baseline.

In other words, in order to appear better, these three banks would have every incentive to crash the Spanish economy!

* * *

In retrospect, it is almost as if 'they' are not even trying any more.

 


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Fri, 09/28/2012 - 15:44 | Link to Comment Seasmoke
Seasmoke's picture

Pick your number and work backwards.....never fails

Fri, 09/28/2012 - 16:09 | Link to Comment trebuchet
trebuchet's picture

picking numbers amd wordking forwards:

circa 90 bn for Spanish banks, 45 bn for gdp optimism plus local govt bailout , c100bn additional interest payments/MTRO payback/credit rating downgrade effects as rates blow out  = 235bn

efsf = 400 bn 

greece shortfall  = 15 bn 

leaves 150bn for Italy      ......         anyone care to estimate their funding needs?

 

Who is for a game of DOMINOES???

or some popcorn while watching the PIIGS run to the trough to get what they can before it runs out

 

 

 

 

 

Fri, 09/28/2012 - 16:31 | Link to Comment fourchan
fourchan's picture

lol they are still boned.

Fri, 09/28/2012 - 17:38 | Link to Comment AldousHuxley
AldousHuxley's picture

How Oliver wyman got the job to do the "analysis".

 

Spanish banksters: "so here is our current revenue and expense projections. What is our short term capital reserve need?"

Oliver Wyman: "well, what do you want it to be?"

Spanish banksters: "That's what those Goldman guys said to Greece before joining the EU. You are hired!"

Fri, 09/28/2012 - 19:09 | Link to Comment dannyboy
dannyboy's picture

Does this mean the spanish banks are getting close to doing the suicide trade?

Sat, 09/29/2012 - 05:25 | Link to Comment falak pema
falak pema's picture

Wyman the pieman; even the best analysts can't resist the lolly when it hangs in front of their noses like Marilyn's tits in "some like it hot!".

Fri, 09/28/2012 - 15:45 | Link to Comment insanelysane
insanelysane's picture

CNBS talking heads were emphasizing that the numbers were only good for a limited time and that things could change instantaneously.  I only note it because they repeated it several times after stating that stress test was good as if they were trying to convince themselves and give themselves an out.

Fri, 09/28/2012 - 17:50 | Link to Comment AldousHuxley
AldousHuxley's picture

Where is the beating?

 

this is beating

http://www.youtube.com/watch?v=kLdSipw7nAc

Fri, 09/28/2012 - 15:48 | Link to Comment insanelysane
insanelysane's picture

Headlines move algos, facts don't do jack squat

Fri, 09/28/2012 - 18:03 | Link to Comment Dareconomics
Dareconomics's picture

You're a wise man, Unknown Comic or Saints fan. It's time for Spain to stop adding to the big steaming pile of bullshit and leave the eurozone:

http://dareconomics.wordpress.com/2012/09/28/the-return-of-the-peseta-sp...

Mon, 10/01/2012 - 05:09 | Link to Comment Anasteus
Anasteus's picture

No one can leave Eurozone. Economic metrics are irrelevant similarly as those of California.

Fri, 09/28/2012 - 15:49 | Link to Comment The Reich
The Reich's picture

Liar Liar Pants On Fire

Fri, 09/28/2012 - 15:50 | Link to Comment Conman
Conman's picture

Who needs critical thinking and analysis when the PPT can come in with the hokey stick save like 5 minutes ago!!! Go PPT go!

Fri, 09/28/2012 - 15:50 | Link to Comment bagehot99
bagehot99's picture

There is now a whole generation of players in this game, whose sole objective is to kick this can far enough down the road that the collapse happens after they have fled the scene.

None of this makes any sense at all. Gutlessness, ultimately, will be what brings this thing down on itself.

Fri, 09/28/2012 - 15:50 | Link to Comment insanelysane
insanelysane's picture

Anyone think Tiger Woods has all his money in Spanish banks?  He is playing like Seve except he doesn't have the 2nd shots Seve had.

Fri, 09/28/2012 - 15:54 | Link to Comment GolfHatesMe
GolfHatesMe's picture

The not-so Artful Dodger

Fri, 09/28/2012 - 15:56 | Link to Comment Peter Pan
Peter Pan's picture

No matter how much distance they try and put between the shit and the fan, the two will eventually meet as the shit multiplies and as the fan gets bigger.

These reports mean nothing when 50% of your youth are without a job. That is the true measure of societal solvency.

Fri, 09/28/2012 - 16:04 | Link to Comment timbo_em
timbo_em's picture

Can someone please give me a rough estimate of how much the Spanish banks actually have to sell on average to come up with that 73B in excess capital?

My assumption would be 20 times 73B which results in 1.5 times the Spanish GDP or one third of the whole Spanish banking system. That would be nuts. But then I'm no banking guy.

 

edit: If I owned shares of Satander, on the basis of that stresstest (approved by the IMF, ECB, EC, EBA, Banco National, Ministry of the Economy and Competition) could I sue their management for not crashing the Spanish economy?

Fri, 09/28/2012 - 16:14 | Link to Comment falak pema
falak pema's picture

DIVIDE THAT BY THREE AND MULTIPLY IT BY TWO, THEN ADD 30%. THERE!

 

Zh is not going to make friends in the financial analysis community.

"You fukkas, you takeka ma bredd away, you no gud! muttha fukka."

Thats a scenario for Scorcese and gangs of NY!  

Fri, 09/28/2012 - 17:36 | Link to Comment Dr Benway
Dr Benway's picture

Thirty-two grams raw, chop it in half, get sixteen, double it times three

We got forty-eight, which mean a whole lot of cream

Divide the profit by four, subtract it by eight, we back to sixteen

Fri, 09/28/2012 - 15:58 | Link to Comment ar01
ar01's picture

Brilliant! Way to ruin the party, ZH... 

Fri, 09/28/2012 - 15:59 | Link to Comment falak pema
falak pema's picture

what? Is there no such thing as an honest Man in the West; are all our financial analysts obsessed by profit and ready to sham their shame sheets  into no blame sheets?

What happened to Wyatt EARP? 

Fri, 09/28/2012 - 15:59 | Link to Comment resurger
resurger's picture

they can repo  Catalonia

Fri, 09/28/2012 - 16:28 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

The analyst at OW is probably related to the guy that created the projections for the Interco LBO back in 1988.  I'm guessing that the estimates for Spain will also come up a wee bit short of the actual results.

Fri, 09/28/2012 - 16:03 | Link to Comment Schmuck Raker
Schmuck Raker's picture

So....you're saying there's a chance. Si!

Fri, 09/28/2012 - 16:09 | Link to Comment TumblingDice
TumblingDice's picture

Smoke and mirrors. Hire expert, get report, report says everything ok except some money, just give us money, central bank/ government gives money, everything is still not ok, hire expert...

Fri, 09/28/2012 - 16:12 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Don't you all know, that Draghi is the master of the universe and that he will fix it, whatever it costs. Reminder: Obama will be the new old potus, and believe me, the US are very angry about this strong USD ( weak EUR ) because Deutschland (and Europe) is and will be exporting as hell. So therefore, no new jobs! Qed

Fri, 09/28/2012 - 16:16 | Link to Comment hannah
hannah's picture

we can critic the numbers but..THEY WORKED. the market liked it for awhile. that is all that matters today. tomorrow we will get a new lie and on and on.....

Fri, 09/28/2012 - 16:29 | Link to Comment Ted Baker
Ted Baker's picture

THIS REMIND ME OF JP LOSSES AND THE WHALE TRADER FIASCO WHEN ONLY UNDER 30% OF THE ACTUALLY LOSS WAS REPORTED..TO WIT, SPANISH BANKS WILL NEED AROUND 200 BL OR MORE THAN 3 TIMES THIS NON-SENSE REPORT ALUDES TO..

Fri, 09/28/2012 - 16:35 | Link to Comment q99x2
q99x2's picture

No World Order. Why don't they buy their own bonds with script like the Bernank and then have the German taxpayers bail them out?

Anyhow, the sooner they go out and round up their vermin degenerate bankster sociopaths and get them hauled into prisons the better off they'll be.

Usually the consultation contract will read one thing and then in private management will wisper a suggestion as to what they need the results to be. That's been my experience. No one can prove the fraud unless the consultant is not good at what they do. Which is fraud.

Fri, 09/28/2012 - 16:45 | Link to Comment debtor of last ...
debtor of last resort's picture

Fucking fascist pigs are everywhere. Not just at the NS'S'A, EP, IMF or SchumerShit. Globalism's playground for people that can't afford to lose

Fri, 09/28/2012 - 16:56 | Link to Comment Yen Cross
Yen Cross's picture

" Welcome to Macaw" , Check your chit at tha do. /bitchez

Fri, 09/28/2012 - 17:00 | Link to Comment magpie
magpie's picture

Every self-respecting pirate needs a parrot

Fri, 09/28/2012 - 18:25 | Link to Comment akak
akak's picture

Aye, that be the truth matey!  Aaarrrhh!

Fri, 09/28/2012 - 16:57 | Link to Comment No Euros please...
No Euros please we're British's picture

Excess capital buffer. Now why didn't Draghi think of that one. Get rid of those old hack Goldmanites and transplant Oliver Wymanites. Europe is saved!!! 

Fri, 09/28/2012 - 17:21 | Link to Comment wagner2626
wagner2626's picture

Wait the reason that Santander and BBVA have more excess capital adverse case is that the percentage of RWA is lower - 6% not 9%...So if BBVA loses 2.7% of RWA going from base to adverse case, then their excess capital should go up as the amount of capital that is needed decrease from 9% to 6%....

I think that the biggest problem is that we are basically at 25% unemployment now and that realistically housing needs to fall 35% from here to perhaps as much as 50% while the adverse case has only 25%....

Fri, 09/28/2012 - 17:30 | Link to Comment Tyler Durden
Tyler Durden's picture

From page 2:

To improve the quality of the projected loss absorption, we...utilized a structured approach to model the additional capital buffer resulting from deleverage, by estimating RWA reductions in line with projected entities’ credit volumes by asset type in each scenario.

Sat, 09/29/2012 - 05:00 | Link to Comment trebuchet
trebuchet's picture

also  their base case scenario assumes no deposit shrinkage while their adverse case assumes 3% CAGR drop in deposits (p52) based on the situation experienced elsewhere. 

 

However, they assume that this shorfall is made up from refunding in the wholesale market, priced at the estimate of the relevant funding for each entity  (which is assumed stable ??? ) p53

Fri, 09/28/2012 - 17:28 | Link to Comment Joebloinvestor
Joebloinvestor's picture

It's even simpler then that.

They move a debt to the other side of the page and make it an asset.

Then they print triple that amount of money to cover both sides and have some reserve.

 

Fri, 09/28/2012 - 17:36 | Link to Comment Go Tribe
Go Tribe's picture

Are there really bank depositors left in Spain?

Fri, 09/28/2012 - 17:44 | Link to Comment Tombstone
Tombstone's picture

These silly stress tests are about as stressful as being dead.

Fri, 09/28/2012 - 18:25 | Link to Comment Cycling Fish
Cycling Fish's picture

Three words: Spanish Bank Run.

aka "the running of the bears".

Fri, 09/28/2012 - 18:45 | Link to Comment DutchMadness
DutchMadness's picture

There is some rumour that Bernanke has been spotted  at Barajas Airport near  Madrid, with a scale-model-of a helicopter  under his arms..

Fri, 09/28/2012 - 23:41 | Link to Comment mademesmile
mademesmile's picture

"Hey Dad, I need to borrow some money"

"Ok son, How much do you need?"

"How much do you have?"

"Let's see, I have 60 Billion"

"Oh great, I just need 59 billion or so"

Sat, 09/29/2012 - 03:43 | Link to Comment bunnyswanson
bunnyswanson's picture

Today, Saturday, September 29th, a huge protest is planned: Spain, Greece and Portugal look to be the big ones. Smaller protests are expected in London, Rome and the Netherlands. It all starts at six pm (Madrid is six hours ahead of EST, so the protests will start at 12 noon - our time, 9 am PST). 40 cities in Spain will be joining the protest, calling it a global emergency and some have tweeted that the Revolution might happen today.

The Spanish Citizens will be surroundi
ng Congress again, demanding the resignation of their government and new elections.

A new tactic of global resistance is emerging: "Surround the Congress." Following #25S, when thousands of protestors converged on Spain's parliament building in Madrid to denounce austerity and the kidnapping of popular sovereignty by the Troika and the Markets, similar actions will take place Saturday September 29th across Spain and in a number of European capitals, including Rome, Lisbon, London, Brussels, and Amsterdam. With momentum behind the new tactic growing, AdBusters has called for an October 31 "Halloween Party" on Capitol Hill. http://ht.ly/2sqdVH

Live Streams:
Global Revolution: http://www.livestream.com/globalrevolution
All Livestreams Here: http://ht.ly/2sqdVH
Spain LiveStream: http://bit.ly/OqbUks
Spain LiveStream: http://www.rtve.es/noticias/directo2
Greece Live Stream: LiveStream: http://www.livestream.com/stopcarteltvgr

On Twitter, you can follow the #29S hashtag: http://bit.ly/QmE5Mp and the #S29 hashtag: http://bit.ly/P1nNNM
Also hashtags: #29sSíSePuede http://bit.ly/R1CfSe and #ows http://bit.ly/QBrzfn

Occupy Wall Street: @OccupyWallSt https://twitter.com/OccupyWallSt

#29S Main call:
http://25sbcn.wordpress.com/2012/09/27/we-come-back-on-26s-and-on-saturday-were-surrounding-the-congress-again/

Portugal:
https://pbs.twimg.com/media/A300IsFCQAAeVTf.jpg
http://acampadabcninternacional.wordpress.com/2012/09/27/portugals-occupy15setembro-movement-unites-to-fight-cuts-on-s29-29s/
https://www.facebook.com/photo.php?f ... levant_count = 1

Italy:
https://pbs.twimg.com/media/A3003ZyCIAAjhvo.jpg
https://www.facebook.com/CATENAUMANA.PARLAMENTO.ITALIANO

The Netherlands:
http://dutchrevolution.blogspot.fr/2012/09/29s-demonstration-1900-dam-square.html
https://www.facebook.com/events/431544976902857/

Belgium:
https://pbs.twimg.com/media/A3zY_jKCQAA5whc.jpg

London:
https://www.facebook.com/events/331009573661835/
Protest Locations throughout Spain - here are their websites, or Facebook pages: http://bit.ly/QylOzf

In Boston, they will have a solidarity protest at noon: http://bit.ly/UWc848

Anonymous released this video in Spanish: http://youtu.be/zbRFsmd2lgU
Spain, Portugal brace for new wave of austerity protests: http://fxn.ws/PM86XJ
Portugal’s protest movement unites to fight cuts: http://bit.ly/Ssl2zL

On Facebook, the following pages should be covering it, aside from ours, of course:
Occupy Wall Street:
International Communication - 15M Occupy Indignados: http://on.fb.me/QMjJws
europeans against the political system: http://on.fb.me/QmEYEL
Artigo 21.º: http://on.fb.me/SkNBzH
Occupy Spain: http://on.fb.me/OuQL8H
Occupy Barcelona: http://on.fb.me/PyyF1i
Rescue Democracy: http://on.fb.me/V8VwVh
Catena Umana Attorno Al Parlamento Italiano: http://on.fb.me/Ssjp5f

Protests Locations in Spain:
Convocatorias del #29S en España
Alicante: Plaza de la Montañeta 19:00. http://www.facebook.com/events/510388865655560/
Almería Plaza Juan Cassinello 18h. https://www.facebook.com/events/270967276356104/
Asturias: 18h frente a la Junta Electoral https://twitter.com/acampadaxixon/status/251425883901001728
BarcelonaPlaça Catalunya 18h, Pla de Palau 18:30 http://www.iaioflautas.org/
Bilbao Plaza Moyua (frente a Subdelegación del Gobierno) a las 18:00
http://m15mbizkaia.net/2012/09/28/29s-concentracion-en-moyua/
Cádiz Subdelegación de gobierno 18h https://www.facebook.com/events/351328678292930/
Coruña Obelisco 18:00
Denia Plaça de la constitució 18h. https://www.facebook.com/events/504067962939040/
Elche https://www.facebook.com/events/510809308931705/
Estepona Ayuntamiento 18h https://www.facebook.com/events/108943039260346/
Granada Rodeará la Subdelegación de Gobierno a las 18:00 horas
Huelva Ayuntamiento 18h. http://www.facebook.com/events/281431641972760/
Jerez Ayuntamiento a las 12h. https://www.facebook.com/events/283831611718592/
León Plz. Botines 19h. http://www.tomalacalleleon.org/29s-no-a-la-represion-policial-libertad-detenidos-25-s-madrid
Málaga Pz Constitucion 18h https://www.facebook.com/events/476092875757208/
Mallorca Plaça de Cort a las 18h. https://www.facebook.com/events/229826997144847/
Murcia: sábado 29, Delegación de Gobierno a las 19h. http://murcia25s.wordpress.com/2012/09/27/el-29-murcia-vuelve-a-madrid-y-a-nuestra-delegacion/
Ourense: Subdelegación del gobierno 19h. https://www.facebook.com/events/368350263241514/
Oviedo frente a la Junta General del Principado de Asturias a las 18hhttps://www.facebook.com/events/357718474315010/
Plasencia Plz. Mayor 12:30 https://www.facebook.com/events/337400339689437/
Santander Delegación de Gobierno a las 18h. https://www.facebook.com/events/462116340478398/
Santiago de Compostela Praza do Toural 19h. https://www.facebook.com/events/446812992029088/
Tarragona Plaça de la Imperial Tarraco a las 18.30h.https://www.facebook.com/events/355513837865717/
Tenerife Parlamento de Canarias 19h https://www.facebook.com/events/321529004612943/
Valencia Corts Valencianes a las 18h. http://www.barriodelcarmen.net/nube/movimiento/item/371-directo-25s
Valladolid Plz España 19h. http://www.facebook.com/events/468613803178842/
Vigo Farola 18h. https://www.facebook.com/events/443754459009367/
Vilagarcía de Arousa, Pontevedra, Galicia Praza de Ravella 19h.http://www.facebook.com/events/504067962939040/
Zaragoza Plaza del Pilar 18h. https://www.facebook.com/events/370184776393483/

#S29: Surround the Congress Spreads to Lisbon, Rome, and Beyond | OccupyWallSt.org

occupywallst.org

Sat, 09/29/2012 - 03:48 | Link to Comment AAA
AAA's picture

Oliver Wyman or is it Oliver "Why Not Man"

Suspecting Oliver Whynot Man's independence and professional integrity is like suspecting a clergyman's intentions when he pats a child...

Sat, 09/29/2012 - 14:36 | Link to Comment M.B. Drapier
M.B. Drapier's picture

Check out Wyman's activities in Ireland. From WP:

Oliver Wyman in 2007 named Anglo Irish Bank as the best bank in the world in a piece of research published to coincide with the World Economic Forum in Davos, Switzerland.[5][6] The next year the Irish Government was forced to nationalise the Bank at a cost of €25 billion.[7][8][9] Oliver Wyman in 2009 also validated Bank of Ireland’s bad debt levels at €6 billion over three years to March 2011, a bad debt level which Bank of Ireland had exceeded by almost €1 billion within a matter of months.[5]

(hat tip Desmond Brennan @ Irish Economy)

Sat, 10/06/2012 - 11:40 | Link to Comment Cabeza
Cabeza's picture

 

Tyler Durden was surprised about the following statement in the Oliver Wyman (OW) report:

Capital buffer generates approximately €73 BN of extra loss absorption capacity in the adverse scenario (€22 BN in the base scenario)

Based on this finding, Tyler concludes that "in the worst case scenario, it is assumed that Spain's banks will sell much more debt, ostensibly hundreds of billions worth, in order to get the benefit of Core Tier 1 deleveraging. ... So basically what OW, Spain, and all those who have endorsed this report and its findings, among them the IMF and the ECB, are saying, is that as the situation gets worse, Spanish banks will delever ... to an amount that on a consolidated basis fress up more capital (€73 billion), than the entire capital shortfall under the same scenario at €60 billion. This also implies that the total amount of deleveraging is in the hundreds of billions (also keep this number in minds). That this is the deus ex fudge used by the European brain trust is simply laughable."

Tyler Durden's conclusion is simply wrong. The system has a higher loss absorption capacity in the adverse scenario, but not because of more deleveraging, but because the target capital requirement has been set at a lower level. This is clearly stated on page 59 of the OW report:

The higher excess capital buffer in the adverse scenario is attributable to the lower minimum capital requirements (6% CT1 in the adverse scenario compared with 9% of CT1 in the base case). 

It would really have helped to read the OW report before distributing stories about alledged manipulation, which are only based on a misrepresentation of the stress test analysis. I also find it shocking that there are 48 readers' comments to Tyler Durden's post on the OW report - and none of these readers seems to have read the report either or noticed Tyler Durden's erroneous representation of the findings. 

 

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