Safe should be the banks, through a new financial crisis better. Many European institutions are still far from it. This shows the stress test, the bank authority EBA has carried out at 51 money worldwide. In this long not only have the Italian banks problems. Also two Irish financial institutions that have been saved during the financial crisis of the state, and the Austrian Raiffeisen Zentralbank (RZB) disclosed weaknesses. The two major German banks, German Bank and Commerzbank, among the rather weak candidates. The institutions have strengthened their capital buffers in recent years, but had not yet been completely healthy, says EBA head Andrea Enria. “There is still a lot of work to do.”
How German banks cut
The German Institute cut the stress test side are not as good as hoped: German Bank and Commerzbank are measured to their capital resources to the weakest ten institutions in Europe. Your capital extends only so straight, so as not to fall below the threshold, issue warnings from the experts: With a core capital ratio of seven percent they begin to worry. The German bank comes to 7.8, Commerzbank to 7.4 percent.
the banks themselves are still not satisfied: “We are in 2016 with a better result from the test came out as 2014, although this year’s test was more challenging,” says John Cryan, head of Deutsche Bank. “The stress test shows that the Bank is well equipped for even tougher times.” At Commerzbank that sounds similar. Chief Risk Officer Marcus Chromik says: “Commerzbank is durable and resistant to stress.”
Financial experts estimate their position against it a little different a. “Calm can not one of these stress test,” says Dirk Schiereck, banking professor at the TU Darmstadt. It is astonishing that the German banks are, despite all efforts no progress in recent years. Looking at the figures more closely, this effect is strengthened. So argue the banks, as well as the EBA, especially with the core capital ratio: ie the equity in relation to the risks. on the other hand, many economists hold another metric for decisive: Equity to total assets (leverage ratio). This figure is considered reliable because they can calculate clear – unlike the risks that are difficult to predict.
If you look at this metric which fall equally by three German banks. Experts maintain a leverage ratio of three percent is appropriate – and German Bank (2.96 percent), lt NordLB (2.99 percent) and Bayern LB; TH & gt; (2.8 percent) are marginally below. Commerzbank manages 3.04 percent only so just about the ultimate brand. Therefore, says Clemens Fuest, head of the Munich-based Ifo Institute, then: “The banks need more capital, not only in Italy.” However,
Bank Professor Schiereck does not believe that the German Institute tackle decided this issue. “The most obvious solution would be a capital increase,” says Schiereck. That is, the banks could then obtain via the issue of new shares fresh money from investors. But John Cryan, head of Deutsche Bank, which ruled out for his house in advance of the test. Such a move would greatly burden the existing shareholders, their shares would be diluted. This will probably prevent at any cost the bank given the already weak share price.
What about the Italians
concerns Europeans as expected especially at the Italian Institute – led by the oldest bank in the world, Monte dei Paschi. She cut so badly like no other institution in Europe. The biggest problem the Bank of Siena are the many bad loans: it has awarded 360 billion euros, the most likely no longer able to repay the customers. Just an hour before the stress test results were published, the Institute has therefore submitted a rescue plan. The institute wants to get rid more than half of its bad loans and implement a capital increase of five billion euros. Backing gets Monte dei Paschi and advice from other banks. A consortium of Italian and foreign institutions – among them should be the German bank, Credit Suisse and Goldman Sachs – to the issue of new shares to hedge.
Sven Giegold, MEP of the Greens, however, reminded the audience that one must consider whether, with this deal does not even state guarantees in the game are. If so, Italy could thus violate the state aid rules of the EU. States may now save in exceptional cases banks. Instead you would only step in the bank’s creditors: So all that hold shares or bonds issued by these institutions. In the case of Monte dei Paschi which are to a very large number of small savers – on the other, large banks such as German bank or investment firms like BlackRock.
Why is there criticism of the stress test
Politicians and economists criticize the implementation of the stress tests partly violently. Many disrupts the sheer selection of verified Geldhäuser. So much less institutions time been studied as yet in 2014. While standing audited 51 institutions for 70 percent of total assets of all European banks. Many Wackelkandidaten remained so but outside it: Neither Portugal nor Greece from a bank has been tested. “This makes the stress test to a pure calming measure for the public,” says Bank Professor Schiereck
In addition, the auditors have low interest rates not included in its test -. Here are preparing the banks big problems. In the short term instead excessively high interest rates have been placed under the stress test, criticized Green politician Giegold. That would even be still appear as solvent ailing banks. “The stress test is only one naive false sense of security,” he says.
Even Lothar Binding, financial spokesman of the SPD faction in the Bundestag, sees weaknesses – especially when it comes to the assessment of government bonds in the banks’ books. “Risks from government bonds have not been considered in the stress test,” he says. Behind this is a fundamental problem: If banks provide business loans, they have to put money aside for safety’s sake – they borrow against it its own State bonds money that is not the case. That is, banks must consider government bonds from their own country as a risk-free investment. “That’s in the current situation in Europe more than tricky,” criticizes Binding. Especially since the Greek crisis have clearly shown that government bonds are simply not risk-free securities.
What from the test follows
Unlike in school, there is the stress test neither Nachsitzer even homework. The Bank draws authority from the results for the time being even no consequences. So you issued any institute the requirement to increase their capital cushions immediately. Instead, it forwards the results only to the supervisors of banks continues, which should take them into account in its further inspections and talks with the institutions. Economists believe this is problematic.
“The stress test can strengthen in this way hardly confidence in the banking sector,” said Dorothea Schäfer from the German Institute for Economic Research (DIW). Such a test could you actually give it. Especially as the experience with the recent stress tests have shown that no consequences were drawn so that Italian banks have already 2014 extremely poorly -.. but hardly learned something from
Isabel Schnabel, an economist and member of the Advisory Council, which looks like “It remains intransparent. how and whether the stress test results are translated into regulatory capital requirements. “they tend not to believe that the supervisors are the banks now come down hard and demanding more capital.” This makes the stress test to a toothless tiger, “she says. Waiting one must However, as the markets react on Monday. “Their pressure could outpace the overseer.”