Central Bank publishes banking stress tests scenarios

[PaddyJoe]

The CB has published some information about the macro economic scenarios that it is using for the Prudential Capital Assessment Review (PCAR) on AIB, BOI, EBS and ILP.
It looks to me that base scenario is already out of date for inflation and unemployment estimates.
Another overly optimistic stress test attempt?

Stress testing is used by banking supervisors to determine whether a bank is adequately capitalised to withstand adverse macro-economic events or unanticipated ‘shocks’. It is not an economic forecast: it employs hypothetical scenarios. http://www.financialregulator.ie/press-area/press-releases%5CPages%5CInformationNote-CentralBankPublishesCapitalAssessmentMacroEconomic Scenario.aspx

[C. Flower]

Very likely has not built in the impacts on the world economy of what's happening in Japan, for starters. This exercise can only be a guess - but I suppose the obvious should be allowed for. I seem to remember that at the time of the last stress tests it was openly said that they were so soft as to be meaningless and that the weakest banks were simply left out.

NAMAwinelake had some thoughts about these tests.

http://namawinelake.wordpress.com/2011/03/15/six-reasons-why-the-bank-stress-tests-might-be-little-more-credible-than-last-year%E2%80%99s/

[TotalMayhem]

I seem to remember that at the time of the last stress tests it was openly said that they were so soft as to be meaningless and that the weakest banks were simply left out.

Of course, banks known to fail the test, like Anglo, were simply left out. Others, like AIB, were allowed to take their 'goodwill' into account (we 'plan' to raise 9.7 billion from asset sales :D ).

It is not an economic forecast: it employs horse manure ... of the real kind.

[Dr. FIVE]

http://30.media.tumblr.com/tumblr_li1xl8gySk1qfw98uo1_500.png

[PaddyJoe]

Being discussed on VinB now.

[C. Flower]

Being discussed on VinB now.

Programme on the Iceland Experience at the same time....

[Apjp]

Young men worst hit. theyve said 2 out of 5 people on the dole men aged 20-30. :P

[Apjp]

Programme on the Iceland Experience at the same time....

will have to be watched on player :P bad clash. VB always comes first..

[C. Flower]

Of course, banks known to fail the test, like Anglo, were simply left out. Others, like AIB, were allowed to take their 'goodwill' into account (we 'plan' to raise 9.7 billion from asset sales :D ).

It is not an economic forecast: it employs horse manure ... of the real kind.
Horse manure would be more valuable than a lot of the collateral.

[ang]

Horse manure would be more valuable than a lot of the collateral.

Certainly more valuable and a lot more productive than the banks.:D

TM does have a point leaving out Anglo and INBS will undoubtedly skew the figures, these stress tests are not worth the paper they are printed own.

It's practically impossible to put a figure on some of the so called assets sitting in banks at the moment.

Unless you have several fire sales of different classes of assets to test and price the market you have no comparative value to work with and furthermore your working with banks that have little or no Capital so aren't they stressed already??

"Give us a figure and we will adjust to suit" sort of tests achieve nothing.

[Sidewinder]

I'm getting really tired of this relentless spoofery and deliberate mendacious constant bare-faced lying by the psychopaths in positions of power, everywhere.

Any of these journalists, politicians, civil servants and other officials...every damn one of them, their natural impulse is to evade, deny, dissemble, mislead. You just can't trust a single word any of them ever say. These vermin just can't help themselves, they are just incapable of telling the truth, ask them a simple straightforward question and their immediate response will be a wall of designed-to-confuse obfuscated bullshit.

These people are sick in the head. And it's long past time that we stopped putting up with it. Call these b'stards out each and every time. Start within your workplace and among friends of family and otherwise in your daily life. Make a scene, tell them to their face they are lying scumbags, give them dogs abuse at every turn, loudly and endlessly demand a straightforward answer. And any time you come across one of these ******** working in a company you do business with, immediately withdraw all support and co-operation from that company, tell them exactly why, and say you will no longer be doing business or cooperating with them unless and until they get rid of the lying psychos.

We need to oust these feckers from the levers of power and ostracise them from society. They need to be lepers outcast unclean, verminous, unemployable, reviled and despised. A harsh example needs to be made of this generation of psychopaths.

[PaddyJoe]

Stephen Kinsella of UL on the stress tests:

Continuing from last week's Tom Waits-themed post, this week let's take in a little Queen and David Bowie while considering just how stressful the stress tests Ireland's banks are being subjected to really are.

Ireland's banks are, indeed, 'Under Pressure'. But just how much pressure is being assumed in the tests being conducted at the behest of the Irish central bank by Blackrock Solutions, the consultancy charged with the task?

Yesterday the Central Bank revealed details of the scenarios being used to test four banks. The headlines made for grim reading for property owners, with a peak to trough fall in value of between 55% and 60%, as reported in the Guardian by Lisa.

Stress tests are simulations performed on a bank's loan books. The tests look at the likely effects on the quality of bank's assets and liabilities when, say, interest rates rise. When that happens, some people will be unable to pay back their loans, and these people will default, leaving the bank with a bad debt it will have to absorb.
http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/mar/17/ireland

[morticia]

TBH, I don't really understand the point of the stress tests; many of the banks so called assets, across Europe, are derivatives that are virtually (and probably deliberately) impossible to put a price on.... until they fail. There's no point in stress testing any of the banks at the moment; the value of everything they've lent money on is plummetting by the day. And the problem with the so-called "lying scumbags" is that many of them were trained to believe in what they peddled, which means that some at least don't know they're lying. Denial is a river in Egypt. Look at all those economists who seem to believe economic growth is just around the corner and only needs a few more recapped banks. When oil is $110 a barrel, there will BE no economic growth. But paradigm shifts of the negative variety appear to be invariably met with ostrich syndrome; don't like the view lads, so heads back in buckets and lets go back to believing in the power of the Markets. The gospel of the Church of Mammon.......

[C. Flower]

TBH, I don't really understand the point of the stress tests; many of the banks so called assets, across Europe, are derivatives that are virtually (and probably deliberately) impossible to put a price on.... until they fail. There's no point in stress testing any of the banks at the moment; the value of everything they've lent money on is plummetting by the day. And the problem with the so-called "lying scumbags" is that many of them were trained to believe in what they peddled, which means that some at least don't know they're lying. Denial is a river in Egypt. Look at all those economists who seem to believe economic growth is just around the corner and only needs a few more recapped banks. When oil is $110 a barrel, there will BE no economic growth. But paradigm shifts of the negative variety appear to be invariably met with ostrich syndrome; don't like the view lads, so heads back in buckets and lets go back to believing in the power of the Markets. The gospel of the Church of Mammon.......


Same goes with property loans, which comprises a good part of bank assets. No one can possibly know the outcome - it's guess work.

And there is no agreed standard for these tests across Europe...

http://www.irishtimes.com/newspaper/breaking/2011/0318/breaking14.html