Tag: stress tests

Profitability

“We’ve already blown past the worst-case scenario on unemployment” | repeat stress tests

Colin Henderson

As banks rush to repay TARP money, driven by the desire to remove government control rather than any reflection of improved financial standing, here is a sobering statement from Elizabeth Warren.  Just as GM didn’t ‘get it’ in terms of the world will look like on the other side of this recession, many banks appear to have similar blinders.  Instead of arguing that they are not in bad shape and that they are secure, why not make changes now that display the recognition that the future is not going to be anything like the past.  I say again, and blame … Continue reading “We’ve already blown past the worst-case scenario on unemployment” | repeat stress tests

Uncategorized

Bank of America Needs $33.9 Billion | NYT

Colin Henderson

As predicted yesterday, the amount of capital the banks need is far in excess of the amounts they were negotiating. This news just in from the NYT confirms what had to be the case.  If we do the math based on project bad debts, it had to be in the $20bn + range for the big banks.  Similar results will apply to Wells, Citi,  PNC and others in the group of 19.  Watch out for the stock market tomorrow.  Reality bites. Bank of America Needs $33.9 Billion, U.S. Determines The government has determined that Bank of America will need $33.9 … Continue reading Bank of America Needs $33.9 Billion | NYT

Business Models, Innovation1 Comment

Where are the bank visionaries when we need them?

Colin Henderson

As we watch for bank stress test results in the US and other countries efforts to deal with Banks’ asset valuation and capital levels, its useful to keep a track on the economic back drop, and assess the bank’s efforts to address their real problem, which is over-valued assets. The US stress tests specifically address the impact on banks under certain sets of future assumptions for economic growth and stability. Spring forecasts 2009-2010 | European commission The Commission forecasts a sharp contraction of the EU economy by 4% in 2009 (relative to a positive growth of 0.8% in 2008). Almost … Continue reading Where are the bank visionaries when we need them?

Uncategorized

The US Government displays extraordinary weakness with Banks

Colin Henderson

This is turning into something of a joke.  The whole point of the ‘stress tests’ was to objectively assess the capital requirements of the Banks’.  Surely no-one could have imagined any outcome other than a requirement to raise more capital.  The only debate might be amount and over what period. In any event there can be no reason to delay the production of the results.  The market is living in the false belief that the government will not hold the banks feet to the fire, at least judging by the stock market.  If we do not get this over with, … Continue reading The US Government displays extraordinary weakness with Banks

Economy

The power of positive thinking from Deutsche Bank

Colin Henderson

This is a very sensible article by Neil Hume at the FT.  He notes the extraordinary growth in bank stock prices since the infamous CitiBank memo in March, wherein he basically pronounced the worst as over, because he had removed the bad people, was instituting new processes, and working with Government. What struck me is this quote from an analyst at DB (emphasis added) On London: Banks’ rehabilitation could take time Add it all up, and the reason banks have rallied is investors are no longer worried about nationalisation and are prepared to look through two years of rising bad … Continue reading The power of positive thinking from Deutsche Bank

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SIGTARP report and report to Congress on stress tests | Apr 19th, 2009

Colin Henderson

The only word for this document is breathtaking.  It is breathtaking because it touches a large amount of the US economy, and the largest businesses in the economy.  It deals with: Banks Auto sector executive compensation Executive replacement ‘luxury’ purchases, (eg corporate jets) SIGTARP administration And the detail contained in the 247 pages is work that is substantially net new since January this year.  I say this in defence of Geithner, and his quiet approach at first.  He has been rather busy.  But to the report to Congress today. The report sigtarp-april2009_quarterly_report_to_congress:   SIGTARP site. Summary of Geithners testimony at FT. … Continue reading SIGTARP report and report to Congress on stress tests | Apr 19th, 2009

regulation2 Comments

Bank capital levels around the world are low and sufferring

Colin Henderson

The IMF report had a spreadsheet in the appendix with bank capital levels around the world. While it has individual countries, I summarised into this chart.  The data shows Capital as a percentage of Assets so higher is good, lower is bad. Note the negative trends in most except Canada, and this is based on the latest data to end of 2008.  Use the thumbnail for a larger version that is clearer. Continue reading Bank capital levels around the world are low and sufferring

Economy

Transparency pledge in bank stress tests – now May 2009

Colin Henderson

Confusing messages coming out on the timing of the Bank stress tests – now expected May. Transparency pledge in bank stress tests | FT The White House on Wednesday pledged “transparency” over the stress tests used to assess the health of the biggest US banks, as officials pushed wary banks and regulators to agree to disclose as much information as possible. Robert Gibbs, US presidential spokesman, said that “early in May” there would be “transparency of determining and showing to all involved some of the results” of the tests. Continue reading Transparency pledge in bank stress tests – now May 2009

regulation

U.S. Planning to Reveal Data on Health of Top Banks

Colin Henderson

I saw somewhere earlier that the President was planning a major economic speech tomorrow, and now this below is finally coming after being delayed while some banks announced.  This probably explains the context. U.S. Planning to Reveal Data on Health of Top Banks | NYT WASHINGTON — The Obama administration is drawing up plans to disclose the conditions of the 19 biggest banks in the country, according to senior administration officials, as it tries to restore confidence in the financial system without unnerving investors. Continue reading U.S. Planning to Reveal Data on Health of Top Banks

Uncategorized5 Comments

Bank Nationalisation must follow failure to meet stress test for solvency

Colin Henderson

Bank Nationalisation is finally the topic de jour.  It is an undercurrent in many discussions, and strangely has the Democrats and Republicans in some kind of opposite land debates. I favour the view of Nouriel Roubini who speaks of the current procress as being death by a thousand cuts in this worth watching video.  The governments in UK and US are dribbling money into banks and the auto sector, with no end in sight, and little apparent contrition from management.  A strategy is needed for both those sectors and decisive action taken. However it has to be based on principle … Continue reading Bank Nationalisation must follow failure to meet stress test for solvency