Greek banks must find extra €14bn to survive dire economic downturn

European Central Bank audit identifies capital shortfall in worst-case scenario

Greece’s four main banks need to find another €14bn (£10bn) of reserves to ensure they could withstand an economic downturn, the European Central Bank said on Saturday.

The four banks – Alpha Bank, Eurobank, NBG and Piraeus Bank – have until 6 November to say how they intend to make up that shortfall, the ECB said. Continue reading

Deutsche Bank – the New Lehman Brothers?

As Mr. Armstrong points out, DB is part of the Euro crisis. It’s exposed to a time bomb of over $70 trillion in derivatives and it’s not surprising that it’s been said to be the next Lehman Brothers. It should be interesting to see how much more it’s exposed to in regards to the Volkswagen ‘scandal’, which is more of a political hit for quick cash. If the global economy is going to collapse, it is going to start in Germany.

 

The rumor mill has been nonstop. The crushing blow to Europe will be the failure of Germany’s biggest bank: Deutsche Bank. Just about every circle is quietly discussing how the bank is facing bankruptcy. The rumors have flown since March when Deutsche Bank failed the U.S. regulatory stress test, which was followed by the resignation of its head in June. A collapse of the Deutsche Bank is profound and very likely to impact Europe to the point that everyone behind the curtain is now calling for a new Lehman moment. Sources tied with the Fed’s decision not to raise rates fear that they will be seen as the cause of its failure. Germany clearly faces a major shock; if this combines with Volkswagen for the turning point next week, well, here we go again. Continue reading

Banks prepare plans for Greek eurozone exit

A new Greek currency? Plausible. Grexit? As oft here discussed, Greece is too important for that.

 

Banks and other financial institutions in Europe are stress-testing their internal systems and dusting off two-year-old contingency plans for the possibility Greece could leave the region’s monetary union after a key election later this month.

Among the firms running through drills are Citigroup Inc., Goldman Sachs Group Inc.,  and brokerage ICAP PLC, according to people familiar with the matter. Continue reading

Top economists warn Germany that EMU crisis as dangerous as ever

Council on Foreign Relations compares Germany’s hardline stance with US policy towards Britain at the end of the Second World War

The eurozone debt crisis is deepening and threatens to re-erupt on a larger scale when the liquidity cycle turns, a leading panel of economists warned in a clash of views with German officials in Berlin.

“Debts above 130pc of GDP for Italy and 170pc for Greece are a recipe for disaster once we go into the next downturn,” said Professor Charles Wyplosz, from Geneva University.

“Today’s politicians believe the crisis is over and don’t want to hear any more about it, but they have not tackled the core issues of fiscal union and public debt,” he said, speaking at Euromoney’s annual Germany conference.

Continue reading

Citigroup Fails Fed’s Stress Test as BofA Gets Dividend Boost

Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress tests, while Bank of America Corp. won approval for its first dividend increase since the financial crisis.

Lenders announced more than $60 billion of dividends and stock buybacks after the Fed approved capital plans for 25 of the 30 banks in its annual exam. Citigroup, as well as U.S. units of Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA, failed because of concerns about the quality of their processes, the central bank said yesterday in a statement. Zions Bancorporation failed after its capital fell below Fed minimums in a simulation of a severe economic slump.

Continue reading

UK banks to stress test readiness for major cyberattack

Only days after the authorities gave UK-based banks a time limit to come up with cyberattack defence plans, details have emerged of a major stress test of current financial systems set for next month.

Dubbed ‘Operation Waking Shark 2′, according to The Daily Telegraph the test day will simulate a “severe” attack on payment providers, banks and markets to sniff out weaknesses in defence strategies, communications, and procedures. Continue reading