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Breakingviews: Testing traders' friends

Friday, March 21, 2014 - 03:27

March 21 - Richard Beales and Antony Currie explain why factoring the failure of a bank's largest counterparty into the stress tests is a good first move – but needs to go further.

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American banks of a bit annual examination from the Fed the circle stress tests. Results are out Antony maybe it's a sign of sort of distance from the crisis in relative health that. It's actually not that exciting -- -- to nominate done in game what they did costumes -- which is there was make sure that he's won back fails. This year because certain banks and -- included any bank with an effective access zions bank and he talked comes in. With under the pretty -- -- -- -- the Nazis. But at this -- -- -- much as they -- -- enough to send a tale comment left at the end of that routine which is which is it's way early is blood types. Last year was ally. But -- in terms of the big banks. They look fun and some of them may have low. Tier one capital ratios and expect that if they came out of 6% which that is piecing. Loved ones come up with this is what we think we would get right but it's the Fed the -- having dozens of has examined that's -- the benefit the necessity to Kenya to steer clear that they have to -- their numbers this year and in England and take his votes on the banks. And they'll use this and bouncy which is next to let them decide which of these banks will have to buy -- -- it's like as the banks have to submit that plans to you know dividend -- -- pay him which says it with a second that the Fed -- Qaeda. Give up next week. Rights have been a couple of penalties and when you you've said -- it's evolving the Fed's -- -- numbers but they're there is a new thing here which is what we -- with Lehman's failure best some -- to -- -- situation is that. Give a lot of exposure to one count boasting that examples of problems of the federal try to look at that list yet and that's a perfect -- -- ice and what we it will most cool cooling of the AIG question right because as he was woman remember the gold and especially. Seemed to get this -- I left and went comparison the count on to say coming up with this kind of numbers there in this dressed as well they don't they visit. Let's see what happens if the single largest -- -- Goes on the right and in addition to always have a bad thing in addition to the other bad things happening and we -- -- you get 10%. Recovery rates already at -- -- -- -- -- -- -- -- -- today a forcing for us I think will be great banks and Monty saying. Who -- -- -- how much. Just got one ghostly look and they knew it we -- based on it is I think I think -- brought the people don't know that -- does that most of Greg makes which I don't know the states already at least in the count bodies in my -- was night. Now I've got it. What it shows that it is this a great increase. From the hostages of the biggest single increase on apps -- bases. Moves on eleven point seven billion of trading losses 213 point three big initiative -- treating us as well as the camp you know and that's helpful of course said. Other risks could go down in the meantime on the -- but right but it's it's pretty -- -- molesting 27 cent a capital Goldman's equates to 32%. Of capital so when their exploits the issue it's it's a bit about having them. But the sent the -- I can we don't have the largest count -- and as you know unless it's in that and I'm like today. The chances are distressed environment. When what these guys on that it's not going to be an image problem nobody wants it's going to be an effective so this is a good stops. And maybe the Fed has the stuff -- just telling but using this to build a much broader picture of where the weaknesses maybe what's that count on guys and a will be much when these things. But I think that they stressed -- oversee. Confused further dilution -- the next stage of that with the dividends and panels but we will have a breaking views you're next week.

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Breakingviews: Testing traders' friends

Friday, March 21, 2014 - 03:27