Friday

30th Sep 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.

New EU rules on financial products in limbo

A feud between MEPs and the EU commission is threatening to derail financial services regulation that would protect consumers from misleading investment products.

Stakeholders' Highlights

  1. EFAEFA Supports a YES Vote in the Hungarian Referendum
  2. ACCAFinTech Boom Needs Strong Guidance to Navigate Regulatory Hurdles
  3. Counter BalanceWhy the Investment Plan for Europe Does not Drive the Sustainable Energy Transition
  4. Nordic Council of MinistersThe Nordic Region Seeks to Make Its Voice Heard in the World
  5. Taipei EU OfficeCountries Voice Support for Taiwan's Participation in ICAO
  6. World VisionNew Tool Measuring Government Efforts to Protect Children Released
  7. GoogleDid You Know Europe's Largest Dinosaur Gallery Is in Brussels? Check It Out Now
  8. IPHRHuman Rights in Uzbekistan After Karimov - Joint Statement
  9. CISPECloud Infrastructure Providers Unveil Data Protection Code of Conduct
  10. EFAMessages of Hope From the Basque Country and Galicia
  11. Access NowDigital Rights Heroes and Villains. See Who Protects Your Rights, Who Wants to Take Them Away
  12. EJCAppalled by Recommendation to Remove Hamas From EU Terrorism Watch List