22nd Oct 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.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

News in Brief

  1. Canada and Wallonia end talks without Ceta deal
  2. Juncker hopes for Canada accord in 'next few days'
  3. Romania drops opposition to Ceta
  4. Difficulties remain on Ceta deal, says Walloon leader
  5. Brexit could lead to 'some civil unrest' in Northern Ireland
  6. ECB holds rates and continues quantitive easing programme
  7. Support for Danish People's Party drops, poll
  8. Spain's highest court overturns Catalan ban on bullfighting

Stakeholders' Highlights

  1. EFADraft Bill for a 2nd Scottish Independence Referendum
  2. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  3. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  4. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  5. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  6. EASPDJoin the Trip! 20 Years on the Road. Conference & Photo Exhibition on 19-21 October
  7. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  8. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  9. Dialogue PlatformIs Jihadism Blind Spot of Western Intellectuals ? Wednesday 26 October
  10. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  11. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16
  12. EJCEU Parliament's Roadmap for Relations with Iran a Massive Missed Opportunity