ECB: The stress test was worth it – TIME ONLINE

Even before the announcement of the results, no one was really happy with the new stress test for European banks. A supervisor scolded in dialogue on the other supervisors. The Association of German Banks criticized the test ignored the problem of low interest rates. And many a banker Nölte that the examination to oversimplify the round will be and the particularities of his institution – will not do justice – of course.

Many participants talked the importance of exercise down even before it was locked. With success, because when the results were published on Friday evening at 22 o’clock, they seemed already to care no more really. Oh, another stress test – and hand on heart, does not every Friday night to do better than to deal with the core capital ratios of Powszechna Kasa oszczędności Bank Polski SA? Just.

Much is rightly criticized. The test of the EU banking supervision EBA comprises only 51 institutes and a problem country like Portugal it has the same completely excluded from the exercise. That his scenarios let the low, often negative interest outside front that will make many banks in Europe already difficult to create and probably much longer eat by their budgets, as previously thought, is absurd and reduces the meaningfulness of the results. In addition, all the effort is little, if then no conclusions are drawn from it, as the stress test 2014 for any Italy happen. There the disclosed problems of banks smoldering cheerfully to herself until she hochpoppten again this summer.

Nevertheless, the exercise is not in vain. The stress test is worth a closer look.

• First, the data. If, for example, the material for the institution with the most valid when regulators Code 7LTWFZYICNSX8D621K86 makes itself better known as German Bank, the groans at first: 29 pages, closely printed, with dozens tables and thousands of figures. They show how the Bank’s portfolio looked the end of 2015 and what consequences would the two tested scenarios for capitalization. That is transparency in an extent that is more confused than help initially. Those who really want to know how big the volume of Lithuanian government bonds with a maturity of three to five years, which holds the bank? Nevertheless, analysts and investors are happy because of the crash of the bank stocks this year is also due to the feeling of not knowing exactly what else is in the houses. The published data will provide some new insights

• Secondly. The old risk The largest by far hole into. banks’ capital rips the imputed recession in the test. That should politicians and citizens remember that many institutions now appear more stable than they are, especially in Germany. Currently the economy is doing well in this country, only a few loans fall out, according to little risk provisioning, the banks have formed. So it can and it will not stay permanently, the next economic downturn will come. While German institutions have solid cut, but if re larger provisions for bad loans have to be formed, is more apparent that many institutions have difficulty at all to make money.
  

• Third. the new risk For the first time, the stress test has also drawn legal risks. Previously stayed overseer on credit losses or market fluctuations, since they have recognized that a failure of management or criminal behavior of employees represent a substantial problem. States impose penalties billion, processes can also be expensive. It may be that the test makes it too easy by updates the legal costs of the past years in the future, but before new offense no bank is immune – and EUR 71 billion, which beat legal risks in the test to Beech underline, how important it is that the industry is the further prevents.

It is encouraging that the investigated banks stand in total significantly more stable than the stress test in 2014. Within two years, the 51 houses their capital cushions total a whopping 180 billion euros bolstered. In the crisis scenario, however, not only banks from Spain, Italy or Ireland are doing badly, but also institutions in Germany, Austria and the UK.

And some homes remain problem cases. The Italian bank Banca Monte dei Paschi di Siena, and has come out in the test catastrophic secured after all finally an aid package that they should stabilize, just hours before the release of results. The German bank provided from durchwachsene numbers but assured to be “on track” to meet the target for its capital “until the end of 2018″. Let’s see how the analysts now bend over the numbers, be judge – and how the stock market reacts on Monday

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