–Adds Comments By Bundesbank Vice President Franz-Christoph Zeitler
PARIS/BERLIN (MNI) – German Banks that participated in the recent
stress tests have bowed to criticism from European regulators and agreed
to publish the full details of their European sovereign debt holdings,
Germany’s business daily Handelsblatt reported Tuesday.
As part of the stress test procedure, all 91 participating banks
had promised to release details of their sovereign debt holdings,
according to the Committee of European Banking Supervisors (CEBS), which
coordinated the exercise. However, six German banks failed to honor that
pledge and were roundly criticized by CEBS over the weekend.
Deutsche Bank on Tuesday became the first of those banks to publish
the information, detailing European sovereign debt it held on its
balance sheet at the end of the first quarter.
The figures, reported along with Deutsche Bank’s 2Q financial
results, show that the bank held a gross E14.802 worth of central and
local government debt from peripheral Eurozone countries, if Italy is
included. After various adjustments, the net amount totaled E10.585
billion. Counting only Greece, Ireland, Portugal and Spain, the gross
total was E4.403 billion and the net 2.443 billion.
Deutsche Bank’s total exposure to the local and central government
debt of 30 European countries was E54.0 billion gross and E32.9 billion
net. About two-thirds of the debt was held on the bank’s trading book,
which is meant for short-term holdings. Trading book holdings were
subject to haircuts of varying magnitudes — depending on the country of
origin — in the stress tests.
The other third of Deutsche Bank’s holdings was on its banking —
or hold-to-maturity — book, which was not included in the tests.
Excluding German government paper, most of which Deutsche Bank is
holding to maturity, 85% of its sovereign assets are on the trading
book. The bank’s holdings of German sovereign debt accounts for 37% of
its total gross holdings.
Bundesbank Vice-President Franz-Christoph Zeitler told Market News
International on Monday that he would embrace full disclosure by German
banks in-line with the CEBS guidelines.
“I would welcome disclosure in view of the practice in other
European countries,” Zeitler said. However, he also noted that “it is
the right of the institutes make their own decisions.”
The Europe-wide stress test results published Friday, showed seven
of ninety-one banks failed to meet the requirement of a 6% tier-one
capital ratio under various adverse economic and financial scenarios.
The total net capital shortfall reported was E3.5 billion.
Citigroup estimated Monday that if CEBS had stress-tested European
banks’ entire sovereign debt holdings, rather than just those
instruments on their trading books, 24 banks would have failed, with a
combined capital shortfall of E15 billion, the Financial Times reported.
[TOPICS: M$$CR$,MGX$$$,MT$$$$,M$X$$$,M$G$$$]