stress tests

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EU banks reach debt holdings all-time high

MADRID | The Corner | European banks have increased their holdings of govies in June by +0.1% m/m (+1.4% y/y), with one somewhat higher increase in the periphery (+ 0.6% m/m and – 1.2% y/y), mostly of a +8.6% in Ireland and +1.8% of Portugal. According to the ECB, EU lenders have reached a new all-time high of 1.8trn debt holdings, while peripheral banks are approaching 2013 numbers (€830bn vs €840bn in June 2013).


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ECB: AQR results will be included in stress tests

MADRID | The Corner | ECB’s upcoming stress tests will have have the AQR findings incorporated (the so-called “join-up”), an element that was previously missing. And banks will be informed of the full and final results only shortly before they are communicated to the markets, as the central bank published on Thursday


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Most EU banks expect medium-to-large consolidations within three years

MADRID | The Corner | Banks feel nervous about the upcoming ECB’s AQR and stress tests. Despite the recent waves of capital raises, lenders still don’t know about the amount of expected recapitalization needs, nor how their provisions against loan losses will do. According to a interesting piece by Bruegel (check their graphs), which comments on the recent E&Y European Banking Barometer, almost one in three of the 294 respondents still expecting to raise Loan Loss Provisions. And, as we wrote not long ago, only 8% of respondents anticipate raising additional capital following the exercise, there is an additional 19% of respondents who a capital raise “might” be necessary.


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Biggest EU banks show poorest Q1 results in 5 years

MADRID | The Corner | The first quarter of the year is usually the best for lenders, and yet major European entities are showing the weakest results since Q1 2009:  net profit fell once more (-9% yoy) to a pale EUR 12, according to a report by Deutsche Bank Research. Potentially high litigation costs and the upcoming ARQ and ECB’s stress tests make them eager to strengthen their capital buffers.


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Market chatter: An agreement to soften stress tests conditions for Spanish banks

MADRID | By Jaime Santisteban | European Banking Association and the Bank of Spain agreed to take into account borrowers’ non-property guarantees to assess the situation of Spanish entities in the upcoming stress tests. Bankinter analysts believe that “such guarantees, which are usually pledging of assets like deposits, shares and/or by consignatures, mean a certainty of collection for banks.” Also,  Amadeus has been one of the most attractive values in the Spanish Ibex 35.


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Market chatter: down the road to a banking union and much more

MADRID | By Jaime Santisteban | In a crucial day for the long-awaited banking union in Europe, market makers also chattered about many other issues, like the Bank of Spain -which has denied it plans to subject Spanish lenders to stress tests this month- achieving less tough criteria for Spanish banks in the upcoming EU stress tests.


stress tests

Stress tests: the quality of its judgment

ANIMAL SPIRITS IN WASHINGTON | By Pablo Pardo | Throughout the last two years, bank regulators have identified a number of increasingly exotic assets in the already-full-of-exotic assets banks’ portfolios. For instance, some institutions are accumulating massive amounts of Credit Default Swaps (CDS). At a time when debt spreads are not just falling, but crashing, what is the logic to hedge in such manner? The short answer is: stress tests.


ecb stress tests

Why is the ECB so demanding with Spanish banks?

MADRID| By Francisco López | Spanish banks are the most closely examined in the world, but it does not seem to be enough for supervising institutions. The ECB has urged them to undergo a new and comprehensive assessment of their exposure to real state sector before the European banking industry’s Asset Quality Review previous to the stress tests that will take place by the end of the year. The central bank has rejected that Spain’s entities use 2012’s review by audit firm Oliver Wyman. Even though ,they reckon, that would save money and time.


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Today’s Talk Of The Market In Spain

MADRID | By Jaime Santisteban | BBVA takes a look on the bright side of the Spanish economy in 1Q14: growth, exports, domestic demand, labor market, public spending reduction. Santander urges the EU to hasten arrangements on SRM to meet Banking Union agenda. Otherwise, stress tests won’t have credibility.


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European Sovereign Debt, Again No Risk Asset

MADRID | By Julia Pastor | The  ECB confirmed on Wednesday that held-to-maturity sovereign exposures portfolios will not be punished, and consequently marked-to-market, in the financial system stress test to be performed at the end of 2014.