Home » Posts tagged 'bank stress test'
Tag Archives: bank stress test
Monte Paschi Rescue On The Rocks: Regulators Now “Expect Bank To Ask Italy For Bailout”
Monte Paschi Rescue On The Rocks: Regulators Now “Expect Bank To Ask Italy For Bailout”
Ever since two months ago, when Italy’s third largest bank – and the world’s oldest – Sienna’s Monte dei Paschi, failed Europe’s latest stress test, it had scrambled, and assured markets, that it would obtain a private sector cash injection, aka bailout, amounting to roughly €5 billion in fresh capital, there was significant speculation in the Italian press that the capital raise was not going well as third party investors were uncomfortable to allocate funds to a bank whose history of failure and unprecedented bad NPL book remained a daunting obstacle. The reason why Monte Paschi was forced to seek a private sector bailout is that Germany had repeatedly shut down Italian PM Matteo Renzi’s attempts to pursue a public sector bailout. Instead, the Germans demanded that instead of a public sector bailout the bank should implement a bail-in, and impair various liabilities, which however could result in another bout of public anger, due to the substantial retail investment in the bank’s unsecured bonds, perhaps culminating with a run on the bank.
In any case, there was little news about BMPS’ ongoing bailout plan, and now we know why: according to Reuters, European regulators expect Italian bank Monte dei Paschi di Siena will have to turn to the government for support, although Rome – as expected – would strongly resist such a move if bondholders suffered losses. Making matters worse, in the first half of 2016 much of the public’s attention had focused on the infamously unstable Italian banks, of which Monte Paschi was the weakest link, and as such the reemergence of solvency concerns involving the Italian lender could potentially reignite fears about the broader banking sector even as the Italian referendum due sometime in late October or November, gets closer.
…click on the above link to read the rest of the article…
25 Banks Said To Fail European Stress Test, 10 In Talks On Capital Shortfall | Zero Hedge
25 Banks Said To Fail European Stress Test, 10 In Talks On Capital Shortfall | Zero Hedge.
With the results of Europe’s annual AQR, aka Stress Test, due out on Sunday, most had been expecting that despite some rhetoric that various brand name banks may fail, that it would be largely more of the usual: puff. That, however, may not be the case, and as Bloomberg just reported, a whopping 25 banks are set to fail the stress test, compared to 105 which are set to pass. As Bloomberg notes:
- 105 banks passed the test, draft document shows
- Number of banks that would have shortfall even after capital-raising to Sept. 30, 2014, is the subject of ongoing talks, a person with knowledge of the matter says
- Negotations continue with about 10 banks shown to have net shortfall after 2014 capital measures, the person says
- An ECB spokesman says the central bank can’t comment on speculation about the outcome of the comprehensive assessment. Any inferences drawn as to the final outcome of the exercise would be highly speculative until the results are final on Oct. 26, spokesman says
…click on above link to read the rest of the article…
Don’t Be Distracted by the Pass Rate in ECB’s Bank Exams – Bloomberg
Don’t Be Distracted by the Pass Rate in ECB’s Bank Exams – Bloomberg.
For investors, the European Central Bank’s yearlong evaluation of the region’s banks isn’t just about who passes and who fails.
The bigger question will be how much the ECB marks down lenders’ capital during its balance sheet inspection known as the asset quality review. The central bank and national regulators will publish their findings on Oct. 26.
“The focus will be on how the asset quality review influences the development of capital ratios and non-performing loans,” said Michael Huenseler, who helps manage about 13 billion euros ($16.5 billion), including European banking shares and bonds, at Assenagon Asset Management SA in Munich.
…click on the above link to read the rest of the article…
