Stress Test Results

[TTrader]

http://www.cnbc.com/id/30626465

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Capital Needs of Big U.S. Banks (in alphabetical order)
American Express - None
Bank of America — $33.9 Billion
Bank of New York — None
BB&T — None
Capital One Financial — None
Citigroup — $5.5 Billion
Fifth Third — $1.1 billion
GMAC — $11.5 Billion
Goldman Sachs — None
JPMorgan Chase — None
KeyCorp — $1.8 billion
MetLife — None
Morgan Stanley — $1.8 Billion
PNC Financial — $0.6 Billion
Regions Financial — $2.5 billion
State Street — None
SunTrust Banks — $2.2 billion
U.S. Bancorp — None
Wells Fargo — $13.7 Billion

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The information that has come out over the last few days has worried me a little...

Does anyone else feel the numbers reported are bellow what was expected/what they should be?

[belgarion]

Not too many surprises in that list. GMAC mainly. I was a little supprised MS was only 1.6 as I'd seen numbers quite a bit higher.

The page contains a link to "the safest banks in the world" as rated by Moody (for what that worth) (http://www.cnbc.com/id/29511488/?slide=2) ... they are:

1. KfW (Germany)
2. Caisse des Depots et Consignations (CDC) (France)
3. Bank Nederlands Gemeenten (BNG) (Netherlands)
4. Landwirtschaftliche Rentenbank (Germany)
5. Rabobank (Netherlands)
6. Landeskreditbank Baden-Wuerttemberg-Foerderbank (Germany)
7. NRW. Bank (Germany)
8. BNP Paribas (France)
9. Banco Santander (Spain)
10. Royal Bank of Canada (Canada)
11. National Australia Bank (Australia)
12. Commonwealth Bank of Australia (Australia)
13. Banco Bilbao Vizcaya Argentaria (BBVA) (Spain)
14. Toronto-Dominion Bank (Canada)
15. Australia & New Zealand Banking Group (Australia)
16. Westpac Banking Corporation (Australia)
17. Banco Espanol de Credito S.A. (Banesto) (Spain)
18. ASB Bank Limited (New Zealand)
19. HSBC (United Kingdom)
20. Credit Agricole (France)
21. Wells Fargo (United States)
22. Nordea Bank (Sweden)
23. Scotiabank (Canada)
24. La Caixa (Spain)
25. Svenska Handelsbanken (Sweden)
26. US Bancorp (United States)
27. Banco Popular Espanol (Spain)
28. DBS Bank (Singapore)
29. Pohjola Bank (Finland)
30. Deutsche Bank (Germany)
31. Société Générale (France)
32. Intesa Sanpaolo (Italy)
33. Bank of Montreal (Canada)
34. DnB NOR Bank (Norway)
35. The Bank of New York Mellon (United States)
36. Caixa Geral de Depositos (Portugal)
37. United Overseas Bank (Singapore)
38. OCBC (Singapore)
39. Axa Bank Europe (Belgium)
40. Credit Suisse Group (Switzerland)
41. Landesbank Baden-Wuerttemberg (Germany)
42. Nationwide Building Society (United Kingdom)
43. CIBC (Canada)
44. National Bank Of Kuwait (Kuwait)
45. Barclays (United Kingdom)
46. UBS (Switzerland)
47. JPMorgan Chase (United States)
48. Bank of Tokyo-Mitsubishi UFJ (Japan)
49. Banque Federative du Credit Mutuel (BFCM) (France)
50. Credit Industriel et Commercial (CIC) (France)

In the Global Finance rankings of the world’s safest banks, the US banking industry only has 4 of the top 50. Wells Fargo is the most highly-ranked American bank, but only finds itself at #21 overall, with a market cap of $45.8 billion. US Bancorp finds itself at #26, while Bank of New York Mellon and JP Morgan are at #35 and #47, respectively.

(Germany) With six banks listed on Global Finance’s World’s 50 Safest Banks, Germany places four banks in the Top Ten, which includes KfW at #1 overall. KfW is government owned and has been in operation for over 60 years, since 1948.

That list suggests the "global banking crisis" is largely related to the abject failure of risk management units in the US banking industry and their flow on effect to a few others that followed the american model. ... Buy financial folks - they'll not be cheaper for quite some time.

Some humour:
http://www.cnbc.com/id/30108264/?slide=9 <<< What 700 US billion looks like ... :D
http://www.cnbc.com/id/30108264/?slide=12 <<< Two Towers down and out but US is building a new one which is even bigger!

[ananda77]

http://www.cnbc.com/id/30626465

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Capital Needs of Big U.S. Banks (in alphabetical order)
American Express - None
Bank of America — $33.9 Billion
Bank of New York — None
BB&T — None
Capital One Financial — None
Citigroup — $5.5 Billion
Fifth Third — $1.1 billion
GMAC — $11.5 Billion
Goldman Sachs — None
JPMorgan Chase — None
KeyCorp — $1.8 billion
MetLife — None
Morgan Stanley — $1.8 Billion
PNC Financial — $0.6 Billion
Regions Financial — $2.5 billion
State Street — None
SunTrust Banks — $2.2 billion
U.S. Bancorp — None
Wells Fargo — $13.7 Billion

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The information that has come out over the last few days has worried me a little...

Does anyone else feel the numbers reported are bellow what was expected/what they should be?

...it is important to know that the so called 'stress test' is not so much about to determine the total capital adequacy for banks, but finding out just how much capital is needed to get the ZOOMBIES through year end 2009;

...no amount of liquidity can restore the MBS securitization markets, responsible for ~ 50% of credit in these markets in the old days, as long as residential and commercial real estate prices are still crashing!!
-banks are simply not underwirting new paper- ...and unless they start, the economic meltdown will continue...

Kind Regards

[belgarion]

The stress test includes two scenarios (the "baseline" and the worst case called "more adverse) against which each bank is measured.

See http://1.bp.blogspot.com/_pMscxxELHEg/SeM5eze47yI/AAAAAAAAFAs/vRlY-Z5pgXg/s1600-h/QStressTest.jpg

Here's an example discussion of whether the scenerios are actually realistic ...

http://www.calculatedriskblog.com/2009/04/roubini-and-stress-test-scenarios.html

These abound on the web with majority seemingly saying that the scenarios are woefully optimistic. I guess the paid advice which is not available on the web must be balancing out the negitivity of the free advice ;)

However, it is worth pointing out that the 'results' are for the worse of the two scenarios, i.e. BAC would need 33 billion in the worst case scenario (not the 'baseline' scenario which is already factoring in further fails in employment and house prices but a positive GDP by Q3.)

Bit of an overview for those interested (and we all should be!) ... http://www.businessweek.com/bwdaily/dnflash/content/apr2009/db20090424_067158.htm?campaign_id=rss_daily

The banks tested are those ... with more than $100 billion in assets at the end of 2008. The banks collectively hold two-thirds of the assets, or more than half the loans, in the U.S. banking system, according to the Federal Reserve. ... Which means there could be the same again required! ... In the worst case ;)

The banks reactions: ... http://www.businessweek.com/bwdaily/dnflash/content/may2009/db2009057_833482.htm ... worth a read.

All in all - I'm somewhat satisfied the stress tests are valid and their objective (which is to inform the public and counter the rumour mill which is feeding GD2) is being met.

So which scenario do I feel is most likely? The baseline is closest to what I'd expect but my mix of the three indicators; GDP, unemployment and house prices; is somewhat different. This is mainly because I've inluded other 'indicators' and the effects these will have on the three prime measures.

BTW can someone start a thread for copper & other core indexes (e.g. shipping) and start a thread ... interesting stuff occuring there ... ;)

[lakedaemonian]

http://www.youtube.com/watch?v=eIrT1aw2qqU :)