European bank stocks were up, up and away on Wednesday, after far less liquidity was demanded from the European Central Bank’s latest three-month tender than predicted. It’s a good sign that the system as a whole doesn’t face a funding crisis.
But — some were more up than others. And it’s worth asking why.
Here’s some post-tender pricing action in Spanish banks, for instance:
Pretty much bouncing in unison, in short, and then keeping gains together.
However — compare Greek banks:
Post-tender pricing was thus much more diverse, and an earlier bounce from before the tender had unravelled.
It’s always apposite to note Greek banks around changes in ECB liquidity. They’re its biggest users, in proportion to their balance sheets.
Piraeus Bank and Alpha Bank fell back the most, for instance — and it’s interesting to observe from this recent Credit Suisse chart that they’ve also been tapping ECB liquidity the most:
Coincidence? Perhaps not. Indeed, shares in Piraeus Bank had troughed on Tuesday, when fears over the ECB tender were at their height:
Now — Greek banks had been trading like hot baklava earlier on Wednesday on merger rumours. Part of the movement here is this speculation coming off the boil. (NBG denied Qatari interest in a stake, for instance.)
But the speculation is in itself a reflection of why there’s a lot of worry over the sector, since mergers promised equity capital — a nice change from the banks’ recent, and rather worrisome, diet of government paper.
So what, you might say: Greek banks need a cheap source of liquidity, and they’re only a small part of the wider eurozone financial firmament anyway.
True. But didn’t this scare start in Greece in the first place?
Related links:
Quantifying the ECB overdraft – FT Alphaville
Credit Agricole names its Greek pain – FT Alphaville
Collect gold for the love of Greek banks – FT Alphaville