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SOME 25 EUROZONE banks have failed a health check by the European Central Bank, reports have claimed, citing leaked documents.
Nearly one in five of the 130 banks surveyed failed the stress test, the Wall Street Journal and the Daily Telegraph said, ahead of the publication of the official results by the ECBon Sunday.
Reuters reports that Ireland’s Permanent TSB is expected to be one of the 25. They stated the bank had a capital shortfall of €800 million to €850 million at the end of 2013.
The shortfall will drop to around €200 million.
The unprecedented health check of eurozone banks comes before the ECB assumes the role of the region’s banking supervisor next month.
The Frankfurt-based institution takes on its new watchdog role on November 4 and it hopes that a “comprehensive assessment” — made up of a so-called asset quality reviews and a “stress test” — will uncover any potentially nasty surprises beforehand.
Citing a draft memo seen by Bloomberg, the Telegraph report said only 10 of the 25 banks which failed the stress test would be told to raise more cash.
The failing banks were thought to be in Ireland, Italy, Greece and Austria and will have until November 10 to fill in capital shortfalls, the paper reported.
The banks were already given a preliminary indication of their outcome on Thursday.
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Bye Bye free banking!
That fux me loan for the wedding
Give them a pay rise. They deserve it.
All banks are inherently insolvent. It’s because of the fractional reserve banking system where only a fraction of the deposits, about 5% at the moment, are held by the bank. 95% of people’s deposits are lent out into society as mortgages or car loans etc.
The 5% of the deposits kept by the banks are for when a person(s) wants to withdraw their deposit completely.
This fractional reserve system becomes a problem when a very large number of people want to withdraw their deposits at the same time causing a run on the bank.
In this scenario the bank literally does not have the deposits to give to people and the government will have to step in to ensure that the bank does not go bankrupt.
You don’t know the definition of insolvency…
Until such time the bank CANNOT meet its financial obligations it remains solvent.
From an accounting perspective insolvency occurs when total debts exceed total assets.
A credit crunch is not the same as insolvency the bank would simply call in the people that owe it money to pay its depositors.
I would say the simply calling people in didn’t work out too well in 2008
“Hi Seanie” (Fitz Anglo boss 2008)
“Hi Denis” (Casey PTSB boss 2008)
” Seanie, remember the 7.2 billion Euro that we lent you out of our depositors accounts”
“Ehh Denis I don’t have it handy. Can we pay you back in Anglo shares”
“You’re allright Seanie I’ll go to the Lenihan (aka The Irish’s bank’s very own Community Welfare Officer) for a sub, we could be needing a few quid ourselves very soon”
“Sorry Denis I have to go, I’m getting a bit sunburnt here on the 16th green with Fingers”
Permanent
The
Sh#t
Bank…..
Remember they paid out bonuses after bailout. Back to basics indeed. And 5bn worth of tax breaks awake as they write off their taxpayer funded losses.
Permanent Trouble & Strife Bank…
This is just another reason why I withdrew all my savings from my bank and placed them in my credit union.
Hopefully not newbridge credit union enda
And what bank are the credit union with Enda? Surely you should know that all deposits with credit unions are then deposited in a bank.
You’re right Luke.
The majority of the deposits in Irish banks probably come from credit unions.
If the credit unions decided to withdraw this money, the banks would probably need further bailouts.
It must be awful embarrassing for the 6 figure “experts” who work in our banks, being superseded by institutions ran by volunteers.
But without the banks accepting these deposits, how would the credit union function? And as for credit union deposits being the majority make up of bank deposits, I’d love to see the statistics to prove that. Seems the credit union needs the bank, more than the other way around. Newbridge credit union comes to mind.
There are plenty of Triple A+ rated banks within the Eurozone.
The central bank may not like it, but our credit unions could easily use them to store their depositors saving.
Are we all not Europeans now?
The few Irish Joke-banks that are left are basically of junk status (at best).
You’re right though, credit unions should look further afield than our own few bust banks as safe havens for their depositors funds.
Same here Enda.
Our Credit union has cash cards, online banking, direct debit facilities all for free.
(oh and it’s ran by local volunteers and it didn’t bust the entire country sentencing generations to debt slavery)
And what bank does your local credit put all the deposits into?
I don’t know.
But I suppose it’s a good problem for them to have.
It could of been worse. All the Irish banks could of failed.
Yeah right.
I can think of 64 billion reasons to question that assumption.
have your say