Home News WSJ : Banks -stress tests do not show the whole truth

WSJ : Banks -stress tests do not show the whole truth

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2010-09-07_Stelzenläufer_als_Bankentürme_ddp LONDON (Dow Jones) – The show recently in European banks stress tests carried out according to a study by the Wall Street Journal ( WSJ ) is not the whole picture of the involvement of banks in debt into government bonds of European countries. ( Reuters photo 🙂

Several banks have provided no claims as comprehensive picture of the extent of the bonds held by them as by the authorities. Some banks have concealed certain debt , adjusted the sum of the other bonds held by short positions.
According to industry representatives and some of the banks indicated that this had at least some institutions such as Barclays and Credit Agricole made a clear commitment to low debt indebted countries. In the blurred image that fits in the context of stress tests determined the level of government bonds held by banks differs considerably from other international information and their own financial reports of banks.
The results provide an important goal of stress testing in question , namely, investors and bankers worldwide to demonstrate the reliability of the European financial system. "This would be contrary to the credibility of the tests , in fact , "said UBS analyst Alastair Ryan. Representatives of several banks said they would be held only at the guidelines of the independent Committee of European Banking Supervisors CEBS. A spokeswoman for the CEBS would not comment .
Barclays shall conduct some government bonds , as they were held for trading purposes. According to Barclays officials they Bonds were excluded as they were held for transactions that Barclays on behalf of corporate clients or states conducted . The volume of the held for trading government bonds fluctuates daily.
The exclusion of government bonds held for trading , the volume of shares held by the Bank Italian government bonds declined by 4.7 billion pounds to 787 million GBP, as Barclays’ representative explained. The London bank said in the context of stress tests that it considered 4.4 billion GBP Spanish government bonds. If the held for trading Spanish government bonds was taken into account , the sum of around GBP 1.6 billion would have been higher.
Barclays had ignored the government bonds held for trading purposes , as this was in line with the recommendation of the CEBS. "We have done exactly what we told the CEBS , "said a Barclays spokesman. The CEBS recommendation was the Bank of the Financial Services FSA has been submitted. An FSA spokeswoman declined comment .
As part of the stress tests 91 banks in Europe had to disclose , among other things , how many bonds of European countries to keep them. Date for the figures was 31 March. At the time the concerns were high at the commitment of banks in bonds indebted countries and the reliability of the European financial system. The publication of the data bank was seen as a great benefit of the stress tests , which were criticized as too lenient in total .
The optimism voiced the results of stress tests in which only seven banks have failed , has calmed the markets , initially . Meanwhile, fears are again germinated after the highly indebted countries such as Ireland and Greece still have to always fight . That in countries such as Portugal , Ireland , Greece and Italy has again become more expensive to insure risks , is a warning.
There are no precise guidelines on how banks should disclose their government bonds. Until recently, investors were also worried no more about it , but they were seen as largely risk-free. Also , most banks have simply taken their government bonds under the category assets in the balance sheet. Since the spring , things have changed. Greece seemed to be around for a while about to can not operate its loans. Only a comprehensive recovery program, the International Monetary Fund and the European Union ended the crisis.

Website: www.wsj.com
– By David Enrich, The Wall Street Journal,
+49 ( 0 ) 69 29 725 103, unternehmen.de @ dowjones.com

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