STRESS TESTS TO SHED SOME LIGHT ON BANKS' POSITIONS - The latest round of bank stress tests aimed at bringing a final, if expensive, conclusion to the domestic banking crisis were delivered to the Central Bank this weekend. Next they go to Government and from there they will go to the public domain.
Over the next week to ten days we are going to be hearing a lot about two new phrases in Ireland's banking vocabulary - the prudential capital assessment review (PCAR) and the prudential liquidity assessment review (PLAR) which are forensic examinations of the banks. These are assessments of the banks carried out by external parties designed to determine how financially strong the banks need to be to be acceptable to international investors and also to their future size and shape. Ultimately the sums involved will be many billions.
Former fundmanager and stockbroker Rory Gillen of the Invest -R Centre website says that basically the PCAR test will make sure that banks have enough capital to withstand more loan losses, while the PLAR test ensures that banks have enough liquidity to meet its needs in the short term for things such as paying its bills. If the banks don't do well on the tests they won't have the confidence of the markets. The analyst says that someone has to draw the line under the banking crisis, but adds that the key question is how are property values in the current market properly assessed. He says the stress tests look at the worst case scenarios and examine whether the banks have enough cash to deal with everything now. He says he believes both AIB and Bank of Ireland will survive, but he adds that their shareholders are living on borrowed time.
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MORNING BRIEFS - KookyDough, a Dublin company that produces biscuit baking mixes, has agreed a €550,000 deal to create two Tesco -own brand lines for the supermarket in the UK and Ireland.
**** An anonymous private donor has given €0.5m to the Michael Smurfit Graduate Business School which will be used to pay half the fees for 12 graduates to undertake post grad studies.
*** The Nikkei is closed today but events in Libya have led to a $2 increase in the price of oil to over $116. This means it is about $4 off the highs seen last month.
*** On the currency markets, the euro is worth $1.4165 and 87.22 pence sterling
