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Keine Transparenz Mit Diesen Untersuchungen

Posted by Larry Doyle on July 26, 2010 3:19 PM |

“Was ist das, LD?” What is this, you ask?

Did you inadvertently hit your keyboard and Sense on Cents is now being delivered in German?  No, don’t worry about that. Although I have always had a strong interest in the German language and history, my language skills have faded over the years. That said, I think readers should be able to figure out the key German word in my title. (I hope my grammar is correct!!)

In light of the European Bank Stress Tests released on Friday, I am compelled to highlight the fact that for a number of German banks there was “No Transparency with These Tests.” How so? The Financial Times reports, Germany Accused of Reneging on Bank Tests:

European regulators have accused Germany and its banks of reneging on a deal to publish full details of sovereign debt holdings, as part of the four-month-long stress test exercise of the country’s banking sector.

In an interview with the Financial Times, Arnoud Vossen, secretary-general of the Committee of European Banking Supervisors, the pan-European banks regulator, said: “We agreed with all supervisory authorities and with the banks in the exercise that there would be a bank-by-bank disclosure of sovereign risks.”

On Friday, CEBS published the results of its stress test exercise, showing seven of the 91 banks tested across the 27 countries of the European Union failed to achieve a tier one capital ratio of 6 per cent once their balance sheets were exposed to a series of macroeconomic scenarios for 2010 and 2011.

The tests – designed to restore nervous markets’ faith in European banks, shaken by the near-default of Greece this year – were supposed to be accompanied by full disclosure of each bank’s sovereign debt holdings.

But six of the 14 German banks tested – Deutsche BankPostbankHypo Real Estate, mutual groups DZ and WGZ, and Landesbank Berlin – did not publish the expected detailed breakdown of sovereign debt holdings, although Postbank disclosed some information on Sunday. Every other European bank, bar Greece’s ATEbank, which failed the test, complied with the disclosure requirement.

Analysts said the German banks’ non-compliance would fuel suspicion they had something to hide, and risked further undermining faith in the whole stress test exercise, already criticised for its benign scenarios.

Are we supposed to blindly trust these German banks at this critical point in navigating the economic landscape? Are you kidding me? No! True sense on cents compels us to trust, BUT verify. Without transparency, can there be real truth and integrity in the process AND the results? Nein!!


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  • Klaus

    Vielen Dank!!

  • Dieter

    Gehen diesen banken “auf wiedersehen!!”

    Are these banks going “Buh-bye!!”

  • coe

    There’s an old German saying, “Kleider machen leute”, that sort of translates in two ways – Clothes make the man, or, man makes the clothes. Couldn’t help but think of it as it relates to the German bank balance sheet – again either way: the assets and liabilities on the financial statement really represent a view on spot and forward risk – transparency is clearly necessary to form an educated opinion about the state of affairs…and at the same time, let’s not pretend these positions and funding vehicles fell randomly pulled off the autobahn onto the balance sheets – management put them there! Until all bank management teams are truly held accountable – and I do not simply mean as a reflection in the currency value – then rationalization, obfuscation, and hallucination are carrying the day – something that would make Jackie Chiles cringe – and I don’t think he’s German…another German word comes to mind – Schadenfreude!

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