Financial Industry 02 (Sep 09 - Sep 10)

[kennynah]

eurogroup's Junker (just reportedly) says no catastrophes from stress tests...

so he says lah...

[winston]

The financial system is collapsing ! The world is ending !

Is Your Local Bank in TARP Trouble? by Gary Halbert
Small Banks in Trouble Due to TARP Money
See if Your Local Bank Took TARP Money
The Commercial Real Estate Bust Continues
Many Banks “Extend and Pretend”
The Economic Recovery Will Remain Weak

http://www.investorsinsight.com/blogs/f ... ouble.aspx

[millionairemind]

European Bank Stress Tests Said to Describe Three Scenarios
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By Meera Louis and Jann Bettinga

July 21 (Bloomberg) -- European regulators plan to detail three scenarios when they publish the results of their stress tests on the region’s banks this week, according to a document by the Committee of European Banking Supervisors.

Banks will publish their estimated Tier 1 capital ratios under a benchmark for 2011, an adverse scenario and a third test that includes “sovereign shock,” according to a template prepared by CEBS for the banks and obtained by Bloomberg News.

In the last scenario, banks will publish their estimated losses on sovereign debt they hold in their trading book as well as “additional impairment losses on the banking book” that they may suffer after a sovereign debt crisis, according to the document that was dated July 15.

Under accounting rules, banks have to adjust the value of sovereign bonds held in the trading book according to changes in market prices, said Konrad Becker, a financial analyst at Merck Finck & Co. in Munich. For government debt held in the banking book, lenders must write down their value only if there is serious doubt about a state’s ability to repay its debt in full or make interest payments, he said.

The sovereign-shock scenario doesn’t assume a European nation will default, said a person with knowledge of the matter, who spoke on the condition of anonymity because the information is private. Instead, it will assume that rising government-bond yields will push up borrowing costs, spurring defaults in the private sector that would lead to losses in lenders’ banking books, said the person.

EU Stress Tests

CEBS coordinates national banking authorities and makes policy recommendations to the European Union on regulation. Spokeswoman Efstathia Bouli declined to comment.

EU regulators are examining the strength of 91 banks to determine if they can survive potential losses from both a recession and a decline in the value of their government bond holdings. They are using the tests to reassure investors about the health of financial institutions from Germany’s WestLB AG and Bayerische Landesbank to Spanish savings banks as the debt crisis pummels the bonds of Greece, Spain and Portugal.

The banks may publish how much they will need to raise in capital if their Tier 1 ratio, a key measure of financial strength, falls below 6 percent under the sovereign scenario, the draft shows. Lenders will also provide estimated loss rates for their corporate and retail holdings for the adverse cases, according to the template.

[profittaker]

Today the Committee of European Banking Supervisors (CEBS) will release the stress test results for 91 European Banks.

Market up or down?

[winston]

Today the Committee of European Banking Supervisors (CEBS) will release the stress test results for 91 European Banks.

Market up or down?

Ha Ha ... do you think they will really tell you if things are bad ?

The assumptions and models will be adjusted, such that things will look not too bad. However, they wont make it looked too good as people will not believe them.

So funny that the Market is focussing on a Non-event ...

[profittaker]

hahaha, winston, very true.

[millionairemind]

EU Stress Tests May Be ‘Missed Opportunity’ to Fortify Banks
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By Andrew MacAskill

July 26 (Bloomberg) -- European Union stress tests found banks need to raise 3.5 billion euros ($4.5 billion) of capital, about a tenth of the lowest analyst estimate, leaving doubts about whether regulators were tough enough.

“The stress tests are a helpful step forward in a number of areas,” Huw van Steenis, head of European banks research at Morgan Stanley in London, said on a conference call yesterday. “But they are not going to be the game changer that we were really hoping and in some cases are a missed opportunity.”
http://noir.bloomberg.com/apps/news?pid ... 1SzU&pos=4

[winston]

TOL:-

The regulators know that their Stress test is not that stressful.

So there would be a lot of coffee sessions behind the scene, to try to improve things with the banks.

Therefore, I think something good did come out from the exercise eventhough there's a lot of "smokes and mirrors" ...

[winston]

US$261b in China bank loans in doubt

CHINESE banks may struggle to recoup about 23 per cent of the 7.7 trillion yuan (S$1.55 trillion) that they've lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation's regulator.

About half of all loans need to be serviced by secondary sources including guarantors because the ventures can't generate sufficient revenue, the person said.


Source: Business Times

[winston]

A Penny Stock Specialist asking you to buy banks

=========================================

You Should Own the Country's Most Hated Companies
By Frank Curzio, Penny Stock Specialist

Big banks have huge upside.

On July 12, I told you it was time to buy financials. I think the opportunity is even more compelling today. I'll show you why in a minute. But first, let's go over the basic case for Big Finance...

The Federal Reserve is keeping interest rates at zero for at least the next 18 months. That means banks can borrow for next to nothing and lend at much higher rates.

Also, almost every institutional analyst lowered earnings estimates heading into the current quarter. That might sound bad, but it means expectations for this sector are low. It makes an upside surprise more likely.

And bank earnings are headed for a boost. All-time-low mortgage rates will spur a wave of refinancing. And high cash levels combined with lower stock prices will heat up the merger and acquisition (M&A) market. M&A generates big profits for banks who act as middlemen.

Plus, financials are one of the hardest-hit sectors. Over the past four months, the Financials Select Fund (XLF) lost 15%.

Even with all this working in the big banks' favor, you may still think I'm crazy to buy here. After all, the financial reform bill (which was signed into law last week) is designed to prevent banks from being "too big to fail."

Shouldn't all that new regulation limit growth and prevent the biggest banks from reaping the kind of profits they saw before the crash?

Well, judging by a few stats I found recently, nothing could be further from the truth...

According to the Wall Street Journal, Bank of America, JPMorgan, and Wells Fargo have 33% of all U.S. deposits. That's up from 21% in mid-2007, the fastest shift of such a large chunk of deposits in U.S. history.

And according to Inside Mortgage Finance, these three banks made 57% of all home mortgages in the first quarter. That's up 28% from 2008.

SNL Financial reports that Citigroup and the other three financial giants had $7.7 trillion in loans and assets as of March 31. That's up 56% since the end of 2007. Their combined assets are nearly twice as big as the assets of the next 46 biggest banks.

These numbers suggest the biggest U.S. banks will ALWAYS be "too big to fail." The risk to the system is too great for the government to let any of these companies go belly-up. It's bad for our country. But it's great for investors: It creates a floor of value.

Plus, right now, Big Finance stocks are trading at attractive valuations. All four of the names I mentioned are trading below 10 times next year's earnings. As I showed you in my chart from "The New Rules of Investing" last week, stocks below 10 times earnings make a great buying opportunity.

Also, with the exception of Wells Fargo (at 1.3 times book), all these banks trade below book value. Your risk is pretty limited when you buy this cheap.

Looking at the upside, over the next 18 months, low interest rates will create huge profits for these giants. That means it's just a matter of time before these banks reinstate dividends.


Longer term, these banks will get a piece of every large public stock offering and M&A transaction for the next 20 years.

At these levels, I suggest adding a big bank to your portfolio today.

http://www.growthstockwire.com/