Recap 2014-09-03


GS Survey on the AQR, covering 125 respondents:

(1) On average, nine banks will fail the test, resulting in €38 bn (median) to €51 bn (average) of cap hikes.

(2) Expectations of an extreme recap outcome (>€100 bn) have fallen sharply (to 8%, from 18% in our previous survey).

(3) Italian, German and Greek banks are perceived to be most at risk.

(4) Among our coverage (large, listed banks), capital shortfalls are most likely to be identified at BMPS (48%), Commerzbank (43%), BCP (34%), BAPO (33%), Piraeus (33%), PMI (32%), Eurobank (30%), Raiffeisen (29%), Alpha Bank (28%) and POP (28%).

(5) Overall, the AQR/test is expected to be credible (for 89% of surveyed investors), which is expected to result in banks outperforming (75%).

Key changes to market expectations: Compared with our previous survey (October 14, 2013), we note:

(1) Credibility has risen: 89% of investors expect the AQR/test to be credible (previously 70%).

(2) A €23 bn increase to recap expectations. Our previous survey called for €75 bn of cap hikes. With €47 bn raised since, a residual of €28 bn remains. The current expectation (€51 bn) therefore implies a c.€23 bn increase to aggregate recap expectations.


  • BoC kept policy unchanged as exp. The statement did not change much.
  • UK Services PMI improved to 60.5 vs 58.5 exp and 59.1 prev
  • EU Services PMI was revised lower to 53.1 vs 53.5 exp and prev. Both France and Germany were revised sharply lower
  • Ukraine claimed it reached a cease fire with Russia, only to retract it later


  • Wed: NZ House Prices, AU Trade Balance, Retail Sales
  • Thu: BoE, ECB, ADP Employment, US Jobless Claims, Services PMI, ISM Non-Mfg
  • Fri: EU GDP, US Employment Canada Employment
  • Mon: China Trade Balance, Japan Eco Watchers Survey, CanadaBuilding Permits, BoJ Minutes, Australia Business Confidence, Home Loans
  • Tue: Canada Housing Starts, Japan Machine Orders