Survey_Dübel_2013

Abstract

The study’s central methodology is the development and analysis of time series from bank balance sheet and cash flow data. Used are the annual reports presented by the case banks and/or their groups from 2007 to 2012. The dates vary in the cases of earlier terminations of banks (Denmark) and later crisis entry points (Cyprus, Greece). Within the bank reporting, the structure and changes of the equity and junior liability positions (subordinated debt and hybrid capital) as well as the cash flow (from financing activities) is of central interest. Detail given in the respective notes to the annual reports, in particular on the bank equity and junior liability positions, is analyzed and enters the analysis where useful. Similarly, occasionally individual bond issues and their conditions are analyzed. Supporting is an analysis of both the offer and acceptance conditions of exchanges in which the banks have engaged with their investors (liability management exercises, or “LME”). This requires screening publicly available investor relations documentation, and in some cases information offered by the relevant securities commission. With the same methodology we review prepayments (‘calls’) of liabilities. There is also some specialized bank research in this area. A difficulty in performing this analysis is identifying the correct balance sheet to analyze if the bank is operating under a holding structure. If the holding company is restructured simultaneously due to its solvency being deeply affected by the solvency situation of the bank, data are consolidated (BFA/Bankia) or measured only the group level (SNS Reaal). Finally, available public information that detail the stress tests used to determine the capital gaps as well as the restructuring or resolution solutions, in particular regarding mandatory liability management and public recapitalizations, is compiled and presented. Such information stems from the consulting firms involved as well as applicable regulators.