Tuesday

23rd Jul 2019

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.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

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.

ECB set to become more transparent

The European Central Bank kept its main interest rate at a historic low Thursday and indicated that in future the reasoning behind such decisions will be made public.

EU audit reform reduced to 'paper tiger'

The EU is close to agreeing new rules for financial auditors, but critics say the draft deal will do nothing to end the dominant position of the "Big Four."

EU hesitates to back France over US tariff threat

France has passed a new tax on tech companies that will affect US global giants like Facebook. Donald Trump has threatened retaliatory tariffs over it. The EU commission says it will "coordinate closely with French" on the next steps.

EU banks more vulnerable to shocks than feared

Eurozone banks, such as Deutsche Bank, might be much more vulnerable to a repeat of the 2008 financial crisis than EU "stress-tests" have said, according to a new audit.

News in Brief

  1. Agriculture MEPs elect far-right vice-chair
  2. Johnson is next British prime minister
  3. Johnson set to be announced British PM on Tuesday
  4. UK-based owners of .eu domains could keep name
  5. Weyand: EU would respond to US tariffs on cars
  6. UK foreign office minister quits ahead of Johnson as PM
  7. AKK to boost Bundeswehr budget to Nato target
  8. Police arrest 25 after Polish LGBT-march attack

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. Macron: 14 EU states agree on a migration 'mechanism'
  2. As Johnson set to become PM, ministers pledge to resign
  3. Poland's PiS prepares 'failsafe' for October election
  4. Abortion Wars
  5. EU goes on holiday as new UK PM arrives This WEEK
  6. Survey: Half of EU staff 'don't know' ethics rules
  7. Von der Leyen signals soft touch on migrants, rule of law
  8. Timmermans: von der Leyen will be tough on rule of law

Join EUobserver

Support quality EU news

Join us