Saturday

23rd Jul 2016

ECB hires controversial consultancy for bank audit

  • Oliver Wyman is a known name in the world of eurozone bailouts and bank 'stress tests' (Photo: Valentina Pop)

The European Central Bank (ECB) on Tuesday (24 September) said it hired Oliver Wyman, a US-based financial consultancy, to help out with a thorough audit of the 130 largest banks in the eurozone.

The review of the banks' balance sheets and capital needs is a prerequisite for the ECB to take on a new task - that of a single supervisor (SSM) for these "systemic" banks.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Oliver Wyman is a known name in the world of eurozone bailouts and bank "stress tests."

Back in 2006, it famously said the Anglo Irish Bank was the best bank in the world. Three years later, the bank had to be nationalised and almost bankrupted the Irish state, which then needed a eurozone bailout.

Last year in the Spanish bank bailout, Oliver Wyman provided eurozone decision-makers with the numbers they expected and which were politically acceptable - around €60 billion instead of a much larger gap that the banks actually had.

Oliver Wyman also did consultancy work in the Portuguese bailout, according to the central bank of Portugal.

The ECB gave no details about the fee or the tender procedures which led to the selection of Oliver Wyman.

It said the firm was "appointed to support the preparation and implementation" of the big banks review.

"Oliver Wyman will support the ECB’s management and coordination and will provide financial advisory services for this project, notably in refining the methodology for the assessment," the ECB said in a press release.

Speaking in the European Parliament on Monday, ECB chief Mario Draghi stressed the importance of this review to be "credible," else it would be "completely useless, if not counterproductive."

But the choice of Oliver Wyman is set to lend credence to claims that it will be a rubber-stamping exercise that banks are lobbying for.

If the balance sheets prove to have too many bad loans and a high risk exposure, there is little the ECB can do - as even the eurozone bailout fund would be too small to fill the gap of big houses like Deutsche Bank or Societe Generale.

The worry in eurozone central banks, according to one insider, is that if banks are reviewed too thoroughly and their problems exposed, they will stop lending and revive the financial crisis.

EU to tweak rules on Chinese 'dumping'

The EU Commission has tried to fudge the issue of whether China is a “market economy” amid efforts to protect European industry from cheap exports.

Court ruling puts Renzi bank plan in doubt

EU court ruling on bank bailouts has raised the likelihood of a political embarrassment for Renzi, months before a referendum puts his future and, potentially, Italy’s euro future on the line.

Stakeholders' Highlights

  1. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event Agenda for 2016
  2. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  3. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  4. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  5. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  6. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  7. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  8. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  9. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  10. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company
  11. Access NowEuropol Supports Encryption. We Can Relax Now… Right?
  12. GoogleLearn about Google's projects across Europe on Twitter @GoogleBrussels

Latest News

  1. Munich attack might not have been terrorism
  2. A very British (and Corbynite) coup
  3. Poland 'changing for the worse' for Muslims and refugees
  4. EU aims to lift visas on Turks despite purge
  5. ECB in ‘bail-out’ of scandal-tainted VW
  6. EU failed to learn lesson from Brexit, Poland says
  7. UK accord on EU workers 'crucial', France says
  8. EU and US take different lines on Turkey crackdown