Interactive DIY Euro Bank Stress Test

Tyler Durden's picture

To all who can't wait for the next European bailout FT rumor that ramps the market 30 minutes before close (only to be completely refuted by Europe itself 30 minutes after that but by then nobody will care), which last night turned out to be speculation of a third and certainly not final version of the joke that is the stress test, here is your chance to run and execute your very own interactive European stress test and not have to wait for the conflicted European media to tell you the outcome. That said, we could argue that Reuters, which created this test, may have been a little optimistic, for the simple reason that assuming a scenario that sees 100% writedowns on all PIIGS bonds, and assuming a 2% Tier 1 capital target, sees just 46 banks failing the "test" with a €257 billion capital deficiency. So as cool as it is, Reuters failed the simplest sniff test, as somehow the apocalypse scenario of a complete pan-European wipeout sees just a quarter of a trillion in capital needed, when in reality every bank in Europe would be completely insolvent. Still, it is fun to play around with. For a few minutes...

h/t Philip