Austrian Banks Exposed To Eastern European Woes: Stress Test Results Ease Concern

• Austrian banks’ heavy exposure to Emerging Europe is raising concern that souring loans in these emerging markets could affect the health of these banks. But stress test results, conducted by the central bank and released in July 2009, show Austrian banks should continue to meet minimal capital requirements, even in the face of non-performing loan ratios as high as 20% in the Eastern European and Commonwealth of Independent States (CIS) countries where Austrian banks are heavily exposed.
• Nun hat es uns auch der RGE Monitor bestätigt. Gott sei Dank!

Globale Rezession und internationale Finanzmarktkrise fordern auch das österreichische Finanzsystem

Na wirklich? Die höchst realistische Erleuchtung der österr. Nationalbank – Aussendung von heute:

Wien, 6. 7. 2009

„Die Umsetzung des österreichischen Maßnahmenpakets zur Stärkung der Banken bzw. des Finanzplatzes Österreich ist im letzten halben Jahr gut vorangekommen und erhöht die Stabilität der Banken“, stellte Gouverneur Nowotny anlässlich der Präsentation der 17. Ausgabe des Finanzmarktstabilitätsberichts der OeNB fest. „Angesichts der internationalen Dimension der Wirtschafts- und Finanzkrise steht das österreichische Finanzsystem jedoch vor einer erheblichen Herausforderung“, ergänzte Direktor Ittner. Der rasante und scharfe Rückgang der Wirtschaft hat auch zu einer Verschlechterung der Kreditqualität bei den österreichischen Banken geführt. Daher sind steigende Wertberichtigungen zu erwarten. 

Stress Tests in Europe: ECB Expects Additional US$283 Billion Loan and Securities Losses Among Eurozone Banks

ECB Financial Stability Review (June 16): Taking into account the write-downs on banks’ securities reported in late May 2009 and the banks’ loan loss provisions for 2007 and 2008, the potential future losses of euro area banks, largely concentrated on their loan exposures, could be around US$283 billion until the end of 2010 for a total of US$649 billion in cumulative loans and securities losses during 2007-2010. These potential losses would be cushioned by provisions and retained earnings over the next two years

Stress Tests In Europe: EU Plans To Quantify Banks’ Recapitalization Need By September 2009

Aus dem RGE Monitor.

IMF (June 8): To make sure the remaining problems in the banking system are addressed, the IMF is backing a coordinated and proactive review of the financial positions and viability of banks. The financial positions of banks need to undergo a comprehensive review to assess capital needs and viability. In addition to identifying impairments, a forward-looking assessment should evaluate the impact of the ongoing recession on capital

June 9: German finance minister Steinbrueck dismissed the need for U.S. style stress tests for single institutions, favors a system-wide assessment

Die deutsche Bankenaufsicht geht davon aus, dass die Banken erst in einigen Monaten die volle Wucht der Rezession bei ihren Kreditportfolios spüren.

Endlich einmal ein klares Wort des Vorsitzenden der deutschen Finanzmarktaufsicht. Aus der heutigen Presse.

Dazu im krassen Widerspruch die dümmliche Wiederholung der Aussagen des österr. Finanzministers durch die österreichische FMA: „FMA: Ost-Kredite sind durch Ost-Einlagen fast gedeckt“. Auch aus der heutigen Presse.

Stress Test Results: What do they Really Tell Us?

From RGE Monitor, Nouriel Roubini’s Consulting Firm:

Overview:  Official stress test results for following assumptions: 1) The total loss rate for loans calculated by the regulators is 9.1 percent, a level that exceeded that seen in the 1930s. 2) Tier 1 capital ratio of 6% and Tier 1 Common capital ratio of 4%; 3) estimated losses of $600bn over 2009-2010; 4) estimated revenues and reserves build over next 2 years $415bn–> estimated need for additional capital buffer of $185bn by the end of Q4. However, by Q1 higher revenues [and FASB accounting] changed so that the additional total capital requirement amounts to $75bn, of which: BofA $34bn; Wells Fargo: $13.7bn; GMAC 11.5bn; Citigroup $5.5bn (after signaling already that it will request to convert the government’s $45bn preferred equity stake into common equity.) Morgan Stanley $1.8bn. Treasury’s injected preferred equity stake is $218bn. Remaining TARP funds available are $110bn. Treasury expects $25bn in TARP repayments soon. Banks start to issue large amounts of common stock again.

Nouriel Roubini: 10 reasons why stress test results are too optimistic:

Die visualisierten Stress Test Results

Aus der Financial Times vom 09/05/09

FT-20090508_USBanksStress_1

Ten Reasons Why the Stress Tests Are “Schmess” Tests and Why the Current Muddle-Through Approach to the Banking Crisis May Not Succeed

Aus Nouriel Roubini’s Blog.

What shall we make of the recently announced results of the stress test? Are they credible? Will they restore confidence in our battered financial system? Will the current approach to resolving the financial crisis work, be effective and minimize the fiscal costs of the financial bailout?

For a number of reasons these results are a significant underestimate of the capital/equity needs of these 19 large US banks.

Roubini in der Business Week

One of the most prominent voices of the financial crisis has been Nouriel Roubini, the New York University economist and chairman of economic consulting firm RGE Monitor. Credited with predicting the housing and financial crisis that crescendoed last fall, his outlook has remained consistently bleaker than those of many other economists, but so far he has often been borne out. As he is fond of pointing out lately, the International Monetary Fund recently revised its estimate of global and U.S. bank losses upward to figures similar to his own.

The economy: Roubini says he doesn’t see much in the way of “glimmers of hope” other economists have noted. Unemployment, capital investment, and exports are all worsening.

On the banks: Roubini has publicly scoffed at the bank stress tests, arguing that the real world’s grim metrics are on course to surpass the assumptions made under its “stress-case” scenario, and soon. And he’s not impressed by the argument that some banks have been run so much better than their peers that they can better withstand the storm.

Lesen Sie den ganzen Artikel in der Business Week.

Insolvent banks should feel market discipline

Aus der Financial Times 6/5, von zwei ausgezeichneten Ökonomen: Nouriel Roubini, Matthew Richardson.

Joseph Schumpeter famously argued that the essence of capitalism was creative destruction, by which new economic structures are born from the rubble of older ones. The government stress tests on the 19 largest US banks, the results of which are due be announced on Thursday, could have facilitated this process. The opportunity looks likely to be missed.