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

Tyler Durden's picture

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%).

As Citi's Christian Schulz notes, "The 2016 stress test is unlikely to fully restore investors’ trust in the eurozone banking system, in our view."

And it seems he is right...

Monte Paschi is holding gains amid its massively dilutive capital raise, but this is noise across the stock's bid-offer.

Finally, we offer Macro-Man's sarcastic take on the EU stress tests as evidence of why EU banking stocks are sliding...

1)  In the latest European bank stress test, Monte dei Paschi ended up with Tier 1 capital of -2.4% in the most stressed scenario


2) Although there was no official pass or fail awards, a negative capital ratio is pretty clearly an epic fail


3) Having sold  €8 billion worth of stock since 2014, BMPS proposes to sell another €5 billion before year end...


4) ...providing they can also unload €9.2 billion worth of NPLs turds off of their balance sheet first


5)  Since the imposition of negative rates in Europe (illustrated by the arrow), here is what the SX7E index has done

6)  So naturally, the stress tests did not measure the impact of more negative rates, only a move higher in rates


7) This is the equivalent of measuring the impact of a dog whistle on a deaf person


8) More European banks failed the Fed's stress test (DB and Santander) than the EBA version (albeit, as noted, there were not official pass/fail grades this time around.)


9) If you can believe it, DB scored half a percent better on the stress test than Barclays


10)  If you were wondering,  by far the highest score on the EBA stress test was achieved by NRW.Bank in Germany.   In a possibly related coincidence, their website looks like it's a school project for a middling web design student, though its career portal does offer applicants the opportunity to "venture into the fascinating world of finance!"

*  *  *

You can't make this stuff up!!

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Ghost of PartysOver's picture

Lack of Faith in Gov't and CB's maybe?

TahoeBilly2012's picture

Make some moar loans. Get that cash out there, deficits don't matter.

BaBaBouy's picture

Is The Problem With The "Banks" Or Is It With  The VIRTUAL PAPER FIATS MONIES Backed By Blowfish ???

KnuckleDragger-X's picture

The paper promises only exist because of the bank cartel. Of course, nothing could possibly go wrong.....

Grey Pawn's picture

It's because people with shit in their eyes and ears

greenskeeper carl's picture

What I find humorous is that they were factoring in higher interest rates. That's fucking hilarious. And thy didn't factor in even moar negative rates. Higher rates? I fucking dare you. Let's see it. Just give me a heads up, I need like 3 minutes to get my popcorn ready.

bob_bichen's picture

Confidence in the System  ... in easy-to-swallow Propoganda form, or fast-acting Thought Control.

NoDebt's picture

Now you know where the phrase "more unstable than an Italian bank" comes from.

Actually, there is no such phrase.  But there should be.


pods's picture

How about "she went down like an Italian Bank?"

It would replace the "she went down like Lehman Brotherss."


RadioFlyer's picture
RadioFlyer (not verified) NoDebt Aug 1, 2016 9:45 AM

*More unstable than a Central Bank.


There fixed that for you.

Zero_Ledge's picture

Please do not worry.


NoDebt's picture

This article needs the word "precipitous" in it somewhere.

Captain Chlamydia's picture

No, it needs that other word. Concatenation. 


In reality, it will not be a single factor but an unexpected concatenation of events.

Wild Theories's picture

I learn a new word every other day on ZH

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Aug 1, 2016 9:39 AM

Buy the Dip

NoDebt's picture

It's implied at this point, I think.

Fogey's picture


That word is getting a bit old now.


Francis Fukuyamas catchphrase from the year of 1992.


I think trust are real assets and sound money.

Martin Antolinez's picture

So who are you going to believe, the European Banking Authority or your own sore eyes?

RadioFlyer's picture
RadioFlyer (not verified) Aug 1, 2016 9:46 AM

I miss the old articles of "Something SNAPPED in the...." 


can we get some more of those Tylers?



JailBanksters's picture

I love it when they say everythings Fine, no really it's Fine.

It remindes me when Women say that's Fine, really it's ok I

go out with the guys tonight, yeah that's Fine.


So I think it means, everything is just fine.


o r c k's picture

You need to pay your fines.

LawsofPhysics's picture

Trust us, all is well...



JonnyCurtis's picture

.. and you must know: NRW Bank is a result of the WestLB (Landesbank) which went bankrupt in 2012.

hooligan2009's picture

I thought North Rhine was the Baltic (Sea of Liquidity and Dry Freight) Westphalia well..nice country, shame about the moslems!

hooligan2009's picture

NRW = Fourth Whine Rest Failure :)