About That European Stress Test, 2011 Edition... And Where The Pain In Spain Is Raining Next

Tyler Durden's picture

Back when Dexia was nationalized in the fall of 2011, one of the running jokes was that it was the bank that had one of the highest grades in the European Stress Test conducted just months prior. Here is another joke: we now know that Spain's Bankia is the next major financial institution which is being nationalized, and whose bailout costs are literally growing by the hour. Was Bankia one of the Stress Test 2011 failures? Why of course not...  But 5 other Spanish banks were.

Source: EBA

As a reminder:

Greece’s EFG Eurobank Ergasias SA (EUROB) and Agricultural Bank of Greece (ATE) SA, Austria’s Oesterreichische Volksbanken AG (VBPS) and Spain’s Banco Pastor SA (PAS), Caja de Ahorros del Mediterraneo (CAM), Banco Grupo Caja3, CatalunyaCaixa and Unnim failed. They were found to have insufficient reserves to maintain a core Tier 1 capital ratio of 5 percent in the event of an economic slowdown. All banks examined in Italy, Germany, France, the U.K. and Ireland passed.


“The problem children are going to be the 16 banks between 5 and 6 percent, and what happens to those,” said Joseph Dickerson, a banking analyst at Espirito Santo Investment Bank in London. “The market will put substantial pressure on those banks to raise capital.”


Those banks include Banco Comercial Portugues SA (BCP), Espirito Santo Financial Group SA (ESF), Germany’s HSH Nordbank AG and Norddeutsche Landesbank. BCP and Espirito Santo will bolster capital or sell assets in the next three months, the Bank of Portugal said yesterday.

In other words, if the bank that passed the stress test has now failed less than a year later, we would be very curious what the true state of the other 5 Spanish banks that did fail the stress test is currently. Again, these are Pastor SA (PAS), Caja de Ahorros del Mediterraneo (CAM), Banco Grupo Caja3, CatalunyaCaixa and Unnim. And that excludes all the non-Hispanic banks that also failed or were on the endangered species list.

Finally, if anyone is still confused where the pain is headed next, here is a list from Morgan Stanley of all Euro banks with a Core Tier 1 ratio that is so low, that the banks will soon regret not raising more capital in the period of calm that the ECB's LTRO bought them.

Hint: CASA is Credit Agricole...

Also, one bank is missing from the list above: Deutsche Bank. CT1/TA: 1.68%. Oops.

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The BEST ever's picture

Bank Runs are No Fun.... can't wait for all that cash to repatriate itself into Amerika! Gold, gentlemen.


Buck Johnson's picture

People will be running to a save place to put their money and it will be in the US.  But with all that money in the US inflation will shoot up.  It's funny that they left out the German Bank at 1.68, not good.

Harlequin001's picture

Well I would never have believed it.

How could such a strong bank possibly fail having only recently passed such a stringent stress test?

Blow me down...

I take it that the test did actually 'stress' the bank, didn't it?

bdc63's picture

'stress tests' -- lol

Orwell would be so proud to see 'newspeak' actually in use ...

BlueCollaredOne's picture

War is peace.
Civilian deaths are collateral damage.
Debt is money.
Fox, NBC et al tell us the truth.
Al queda are terrorists to us when we are fighting them, but insurgents when it benefits the system.
Military contractors are mercenaries
Food is food

I could go on forever, but it's a pretty nice day outside here.

Poetic injustice's picture

Hey, stress tests keep clercs busy so they don't fall asleep.


Dexia, Bankia, dumbfuckia. 

ThirdWorldDude's picture

"Welcome to Anexia"  -   W.S. Burroughs

the 300000000th percent's picture

They always assume interest rates will stay the same, stupid humans

CClarity's picture

The rain in Spain falls mainly on the plain, with a stain, to constrain, not attain, any grain, more pain, no gain, for your brain, insane . . . again!

Rusticus's picture

 Innuendo: a Spanish depository suppository.  

hugovanderbubble's picture

Credit Agricole will be nationalized.


Threshold Pharmaceuticals will be 1.250-1.650 Mn.$ Market Cap Stock

Paul Atreides's picture

Thank you Tyler for providing more factual evidence that these stress tests are an utter farce.

Side note: I bank ran 5k this afternoon for some more physical PMs muhahahaha

tony bonn's picture

lie,lie,lie....if you are a bankster or politician your life is a lie....the problems in europe are getting airplay to hide the mess at jpm.....however real and urgent the european implosion is, the real problem is the usd / ust.....spain ain't nothing but a thang.....the jpm story (with its fed / executive / legislative acomplices) is the fraud of the millenium - just behind the emergent anti-christ....

timbo_em's picture

Qu'est-ce que vous faites maintenant, Monsieur Hollande?

q99x2's picture

Hey Larry give this guy another dose of weasel.

Eddyspain's picture

Well,  Pastor was absorbed by Popular (today degraded to junk status by SP) CAM has been nationalized. Banca Grupo 3 has been absorbed by Ibercaja. CatalunyaCaixa has been nationalized. And Unimm has been absorbed by BBVA. So as you see, not one of the 5 banks/cajas that failed the stress test has survived as a stand alone entity.

H. Perowne's picture

This is bullish for stocks, no doubt.

Joebloinvestor's picture

The Spanish lies are getting caught up faster then the Greek lies.

The end result will be the same.

A bunch of broke liars, pointing the finger at anyone else but themselves.

What is worse about Spain is the banking system is just hopeless.

slewie the pi-rat's picture

but it has all been very professionally managed!

zombies doing stress tests on zombies and then lying about them?  or did the zombies being tested lie on the tests and then the zombies doing the testing told the truth but it was all lies?

some daze i just don't know which zombies to trust! 

Snakeeyes's picture

While Spain isn't the only one hurting, most of Europe fell for the Keynesian nonsense where entitlements and government cronyism is perpetuated under the belief that "debt doens't matter if you can print."


The US fell for the same trap.

css1971's picture

UK: LLoyds and RBS are already nationalised.

That leaves Barclays. Their perpetual bonds are yielding more than 10% at the moment.

euflated's picture

Latest news on tv: Bankia needs to be propped up by an amount of 19 Billion euros. Spain planned on making 48 BN budget cuts, so they can immediately add 19BN for Bankia only. And other Spanish banks with all their real estate loans are likely to follow soon.


CA S.A. (Crédit Agricole) on the other hand may need some further analysis. 49% of its shares are floating and 51% is held by the local cooperatives.

CA S.A. may not have a high CT1/TA ratio, but the local cooperatives may have substantial equity.

WallowaMountainMan's picture

gotta love it. zh always covers the bases.

toss in the micro hunter nanex, and what you have is actually the cutting edge, from top to bottom.


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