stress tests

  • Bring your A-game, guys, for Christ's sake.

  • rbs1-260x175


    RBS Messed Up But It’s Okay

    RBS’s full-year 2016 capital ratio under the European Banking Authority’s “Adverse Scenario” is 5.7% versus 6.7% previously reported—meaning the bank just hurdled the minimum 5.5% pass rate. The EBA organized the stress tests, which were aimed to help restore confidence in bank balance sheets. RBS said it erroneously considered around billions of pounds of deferred […]

    / Nov 21, 2014 at 12:09 PM
  • Banks

    Goldman Sachs: Teacher’s Pet

    Wall Street’s banks were pretty hard on themselves for this year’s choose-your-own-misadventure stress-test trial runs, conjuring a way worse recession than they did last year, and doing concomitantly worse as a result. Citigroup’s Tier 1 would fall from 9.1% to 8.7%, JPMorgan’s from 8.5% to 8.4%, Morgan Stanley’s from 9.5% to 8.9% and Wells Fargo’s […]

    / Sep 16, 2014 at 2:16 PM
  • Banks

    Scapegoat Watch ’15: Citigroup Stress Tests

    The trauma of having your allowance withheld by the Federal Reserve is bad enough. What’s worse is having the failure laid squarely at the feet of two top officials who you’ll be sharing an elevator with for the foreseeable future. Mike Corbat won’t be making the same mistake next year.

    / Apr 4, 2014 at 1:29 PM
  • citigroup


    Qualitatively, Citigroup Would Go Down For The Dirtnap In Redo Of ’08

    Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress tests, while Goldman Sachs Group Inc. and Bank of America Corp. passed only after reducing their requests for buybacks and dividends. Citigroup, as well as U.S. units of Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA, failed because […]

    / Mar 26, 2014 at 4:47 PM
  • Or whoever. Disasters, etc., is the point.


    Federal Reserve Hints That Maybe Banks Should Hire Jerry Bruckheimer To Help Write Their Stress Test Scenarios

    Today the Fed released a paper making fun of banks for their lame responses to the Fed’s stress tests, both on prudential-regulatory and on literary grounds. For instance, the banks were supposed to come up with their own stress scenario and see how they’d do in that scenario, and a lot of banks apparently phoned […]

    / Aug 19, 2013 at 4:21 PM
  • Banks

    EU Planning Imaginary Bank Stress Tests Or Something

    The potentially delusional Europeans are setting an “illusionary” timetable for what may be magical tests based on comically enormous spreadsheets that may or may not accurately reflect anything.

    / Aug 16, 2013 at 2:18 PM
  • I'd be happier with the $5 billion


    Turns Out Warren Buffett Doesn’t Want That Much Goldman Stock

    Derivatives are confusing, even pretty simple ones, which is why Goldman Sachs can describe Warren Buffett’s sale of $5 billion of GS stock like this: The Goldman Sachs Group, Inc. today announced that it has amended its warrant agreement with Berkshire Hathaway Inc., and certain of its subsidiaries (collectively, Berkshire Hathaway) from cash settlement1 to […]

    / Mar 26, 2013 at 11:35 AM
  • The illusion of science!


    Fed Kicks Off Awkward Week For Banks

    One of the nice things about last year’s Fed bank stress tests was that they were released, and everyone was like “OMG Citi failed!!,” and then we all calmed down and realized that all that meant was that Citi’s capital return plans had failed, so it couldn’t launch a big share buyback, but it wasn’t […]

    / Mar 7, 2013 at 6:20 PM
  • Banks

    Survey: Investors Expect Banks To Meekly Over-Comply With Regulations Without Pushing Back On Anything

    On Monday, as a bevy of banks were settling a zillion dollars of mortgage lawsuits and putting themselves on a path to (1) certainty and (2) giving money back to shareholders, Goldman released a research note with the results of a survey of investors’ expectations of bank capital return.1 Here is what some sample of […]

    / Jan 9, 2013 at 11:03 AM
  • In happier times.


    Fed’s New Stress Test Rules Come Too Late To Save Vikram Pandit

    My simple model of How To Be A Bank goes something like (1) amass assets that are numerous and volatile enough to make your management rich and happy and (2) give as much money back to shareholders as you can, consistent with (1). If that were your model and you were building your capital plan […]

    / Nov 9, 2012 at 3:13 PM
  • Vikula

    Banks, News

    Citi Will Try The Stress Test Again With A $9bn Stock Buyback

    More stress tests, bleargh. I guess the news is that Citi “failed”, though I can’t get all that excited by that because it didn’t exactly “fail” in the sense of now it’s being forced to raise capital / broken up / burned to the ground. Instead it failed assuming it follows the capital plan it submitted to the Fed, which is clearly a capital-lowering rather than capital-raising plan. I ballpark it at $10bn of share repurchases and dividends,* which is … well, it’s pretty big for Citi. So they can just not do that then. Or not do quite as much of that, which seems to be their plan:

    In light of the Federal Reserve’s actions, Citi will submit a revised Capital Plan to the Federal Reserve later this year, as required by the applicable regulations. The Federal Reserve advised Citi that it has no objection to our continuing the existing dividend levels on our preferred stock and our common stock, and we plan to do so, subject to approval by the Board of Directors each quarter. The Federal Reserve also advised that it has no objection to Citi redeeming certain series of outstanding trust preferred securities, as Citi proposed in its Capital Plan.

    We plan to engage further with the Federal Reserve to understand their new stress loss models. We strongly encourage the public release of these models and the associated benchmarks and assumptions. We believe greater transparency in this process will best serve all banking institutions and their shareholders as well as the international regulatory community and market participants, and will encourage a level playing field globally.

    There are at least two ha! moments in that snotty last paragraph. First there’s the fact that the Fed had planned to release the stress test results on Thursday and got gun-jumped by Jamie Dimon. So much for Fed transparency. But also, specifically, as people are all running around suing each other about the Fed maybe kind of encouraging bank CEOs to hide material information from investors, it is odd that the Fed would have the stress test results and sit on them for two days. Imagine the scenario where Jamie Dimon, Vikram Pandit, and the Fed all know that JPM passed and was going to do a largeish buyback, while Citi failed and was going to do a … I guess somewhat smaller buyback – and they didn’t tell anyone from today until Thursday. If you sold JPM to buy C today, wouldn’t you be kind of annoyed?**

    / Mar 13, 2012 at 6:51 PM
  • Banks

    Jefferies Doesn’t Need Your Stamp Of Approval But A Little Praise Might Be Nice

    There’s that famous line that “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” It is sort of inspiring to see Jefferies refute that with a combination of (1) pretty good arguments and (2) still existing. At […]

    / Nov 22, 2011 at 5:57 PM
  • News

    Banking Industry Should Feel Free To Slash, Hip Check General Population Into Boards Again, Says BarCap Analyst

    The Fed plans to notify financial institutions that passed a second round of stress tests that they can begin returning money to their shareholders, an important sign of the banking system’s speedy recovery. Banks are expected to review the Fed’s findings with their boards and could put out a flurry of announcements as early as […]

    / Mar 18, 2011 at 1:37 PM
  • News

    Stress Test Success, Cult Of Bernanke Says

    The Church of Federal Reservology today proclaimed all but one of the country’s biggest banks clear of all the engrams caused by the late economic crisis. It took $77 billion–slightly more than the $74.6 billion the Church predicted–worth of auditing sessions, but nine of the 10 biggest banks waylaid in the subway by Church volunteers […]

    / Nov 9, 2009 at 6:04 PM
  • News

    U.S. v. U.K. Cagematch Continues

    Just in case you had not yet gotten your fill of the Cross Pond Classic, another event is introduced: The 400 meter stress-test hurdles. GO! Analysts Olivia Frieser and Andrea Cicone concede the test is a “real one”, in so far as the parameters – 12 per cent unemployment, 50 per cent fall in house […]

    / May 28, 2009 at 3:16 PM
  • News

    Feel Good Article Of The Day: At Least The Europeans Suck Worse

    True, we think canned “stress tests” with negotiated findings are a joke. Still, it’s something to tell the neighbors. Neighbors who, in this case, don’t have one to tell back. Might we have a chance to see the effects of different approaches (the all-encompassing Geithner v. The “No Soup For You” Merkel) on financial crisis […]

    / May 12, 2009 at 10:31 AM
  • News

    Capital? We Don’t Need No Stinking Capital.

    We loves us some State Street. Thumbing your nose at the Capitalatchiks and their bogus “stress tests” is the quickest way to get on our good side in this day an age. Of course, it won’t last. “Improving capital” is going to come to everyone at one point or another, even if its only after […]

    / May 7, 2009 at 3:23 PM
  • News

    Stressed By The Test

    So remember that totally crazy rumor everyone thought was insane to the effect that pretty much all of the banks (16 of 19) failed the stress tests? Or were “technically insolvent,” whatever that means? That rumor seems to have originated with a April 19th weblog entry from Turner Radio Network listing 7 facts about the […]

    / May 5, 2009 at 7:45 AM
  • News

    Short Stress

    Well, looks like stress tests have some fans after all. Short sellers. Are we the only ones amused that the unintended consequences of inflicting stress tests on banks include a big spike in the administration’s second most hated side-effect of financial markets- short selling? (The first is when Volcker calls fifteen times in a row […]

    / May 4, 2009 at 11:28 AM
  • News

    Stress Kills

    We knew to expect a bit of a circus during “Stress Test Release Week,” (and we loved the theater of making bank heads come in for their results- it’s parent teacher conference time again!) but it has gone from shabby (no immediate release of results?) to beyond theater of the absurd. (GDP projected to increase […]

    / Apr 24, 2009 at 2:17 PM
  • News

    Public Private Stress Test Partnerships (PPSTP)

    Competition between stress tests is heating up even as we type this entry. Not content to wait for indeterminate periods on sketchy results of questionable value, some aspiring outsourced regulators have designed their own stress tests. Early results are as daunting as their methodologies are mysterious and, of course, the most dramatic predictions tend to […]

    / Apr 23, 2009 at 12:30 PM
  • News

    Who’s It Gonna Be?

    Does anyone else think there are too many “Nobel Prize Winning Economists?” I mean, you can’t turn your head without seeing the opinion of one or another of them these days. Today it’s “Nobel Prize-winning economist Michael Spence,” who is pretty sure (but don’t quote him) that not every bank will pass the stress tests. […]

    / Apr 20, 2009 at 12:11 PM

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