Not more European bank stress-test leaks. Although at least this particular indiscretion, centred on German banks, hints at how the actual tests will be received.
As Bloomberg reported on Tuesday:
Deutsche Bank AG, Commerzbank AG and Bayerische Landesbank passed a stress test that evaluated how about 25 European lenders would weather an economic downturn, said three people familiar with the results.
The three German lenders’ tier 1 capital ratio, a key measure of financial strength, exceeded a threshold of 6 percent under the economic scenario, said the people, who declined to discuss the performance of banks outside Germany. The tests didn’t include sovereign debt, two people said.
(The full test results will be out in July.) But compare this Bloomberg story, from Monday:
Stress tests on European Union banks should assess sovereign-debt risks when calculating how lenders would perform against shocks to the banking system, according to a draft EU document…
According to the draft EU paper, “appropriate and common methodology should be devised as soon as possible in order to assess the resilience of banks, including the exposures to sovereign risk, matching closely market concerns regarding the exposures.”
Interesting discrepancy. If these three German banks have already passed their stress tests without sovereign risk being applied, then it’s unlikely that it’s been applied to the remaining 22 banks either. Which makes this draft document look something of a smokescreen.
Interesting timing for the leak, too, on a grim day for the European banking sector.
Deutsche et al. weren’t spared, despite their apparent test results — although they outperformed their French peers:
In short, the German spoilers suggest that investors won’t have reason to trust the official Europe-wide stress-test data come July. Curious leaking strategy, that.
Related links:
Must Europe’s stress tests fail in order to succeed? – FT Alphaville
Some stresstestimates – FT Alphaville
So who is this person familiar with the matter? – FT Alphaville
An €11bn stress test scenario for Santander, BBVA – FT Alphaville