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’Eurozone bank CDS goes squeaky-pop
Eurozone financial CDS has well and truly tightened from last week’s blow-outs:
Click to enlarge the chart, provided by Markit. Sovereign CDS is also squeaking back.
Spare a thought for those who bought protection late last week…
Snap news
Breaking pre-market news on Wednesday,
-Home Retail announces £150m share buyback alongside results – statement.
- BBVA reports flat Q1 net profit, says bad debts remain at same level as December – statement.
The non-performing pain in Spain goes on, and on
The Bank of Spain released the February data for Spanish banks’ non-performing loans on Monday, and the details aren’t pretty.
Like much else in the wreckage of Spain’s pre-recession property boom, the performance of these banks’ loan portfolios is less than reassuring,
The fight for deposits in Spain
FT Alphaville alerted readers on Tuesday to some of the factors raised in Iceland’s investigative report into the country’s banking collapse.
Appendix 3: Iceland’s failed banks – a post-mortem, by Mark J Flannery of the University of Florida noted the extent to which Icelandic banks had embarked upon measures to raise depositor funds,
Banking bubble (charts)
Warning: this post contains a bubble chart.
Citi’s European banks research team has come up with a fresh take on earnings and valuation bubbles across major markets.
Analysts led by Ronit Ghose compared the market value of banks to the size of the economies in which they are based – a measure dubbed ”penetration”.
Cashflow, Spanish banks and ECB support? (Updated & debunked)
Updated with Santander comment below.
We know cashflow doesn’t necessarily mean very much when it comes to banks, but as the figure was missed out in Santander’s unaudited full-year report issued last month,
‘We believe the market might be underestimating the risks the [Spanish] financial system faces’
Straight reporting this.
On Thursday Credit Suisse cut their 2010-2012 earnings estimates and price targets for all the Spanish banks they cover by an average 11 and 7 per cent, respectively. They currently have underperform ratings on purely domestic Spanish banks,
Carry-ing on in Spain
Funding costs. Familiarise yourself with the term.
It’s making headlines on Wednesday, having cropped up late last year, and is likely to continue to be a buzzword this year. The reason? For a start wider spreads on government bonds are feeding into banks’ funding costs.
The contagion spreads
Iberian stock markets look to have seen a ghost on Wednesday afternoon:
With financials the hardest hit:
Now, there are plenty of rumours doing the rounds to explain the sell-off; an imminent downgrade of Spain’s credit ratings is one of them.
BBVA, an exercise in Spanish banking losses
Remember BBVA?
The Spanish bank surprised markets last week with an earnings miss, causing its shares to fall about 6 per cent on the day.
In addition to revaluing some of its US business, the bank also “reassessed”
If I had a pound, peseta, drachma or a deutsche-mark…
. . . the real effective rate would be:
Or rather, that’s the purchasing power of the euro in each of the countries featured.
As BNP Paribas notes the rates currently suggest Ireland and Spain are operating at a higher effective euro rate than Greece.
BBVA’s collateral damage
Spain’s BBVA was trading over 4.4 per cent lower on Wednesday after reporting its fourth quarter results. As Bloomberg reported:
Jan. 27 (Bloomberg) — Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest lender,
Snap news
Breaking pre-market news on Wednesday,
- SAP Q4 profit falls as customers cut spending – statement.
- BBVA Q4 profit plunges 94 per cent to $44m on asset writedowns – statement.
- Tullow Oil to place new shares equal to 10 per cent of current capital -statement.
UBS, Citi and other ‘below average’ banks
Standard & Poor’s freshly published comparison of global banks’ risk-adjusted capital (RAC) adequacy made for gripping reading on a chilly Monday morning in New York.
The report contains 22 pages of data,
BBVA plans fresh China Citic investment
Spain’s BBVA is set to exercise an option to increase its stake in China Citic Bank from 10 per cent to 15 per cent, cementing its position as one of the leading European investors in mainland Chinese banking.
Snap news
Breaking pre-market news on Tuesday,
- UBS appoints Robert McCann to head new US wealth management unit – statement.
- Yell extends refinancing deadline until October 28 – statement.
- Barratt Developments warns investors that UK post strike could delay requests to take up rights issue allocations – statement.
John Hempton does Spain
Perennial FT Alphaville favourite John Hempton, of Bronte Capital, is on the trail of Spanish banks.
And he is asking a question that has oft been heard wafting down the corridors of FTA HQ — are Spanish banks hiding their losses?
Recall that independent research house Variant Perception kicked off the debate with a now-notorious note with the same title. Spanish banks,
BBVA names new chief
BBVA, the second biggest Spanish bank after Santander, on Tuesday named Angel Cano Fernández as its new chief executive to lead a more aggressive international expansion programme. The board decided on Tuesday that Francisco González,
Spanish catastrophe, otro datapoint del dia
Here’s a rather pointed rejoinder from Credit Suisse, on the matter of Spanish banks:
Contrary to some investors and analysts, we are not particularly concerned about the solvency of the institutions we cover.
The idea that Spain’s banks are not technically insolvent (hooray) is about the limit of Credit Suisse’s bullishness,
Bove braced for (many) more bank failures
What fun. Another 150-200 US banks are in line to fail in coming months, according to Rochdale Securities’ Dick Bove (formerly of Ladeburg Thalmann). Furthermore, according to the banking analyst’s latest note,
Weekend catch-up
In case you missed these stories:
- Spain’s BBVA acquires Guaranty
BBVA, the Spanish bank, on Friday succeeded in its acquisition of Guaranty Financial, a struggling Texas bank with $13.5bn in assets.
Spain’s BBVA leads race for Guaranty
BBVA, the Spanish bank, on Wednesday emerged as the frontrunner in the auction for Guaranty Financial, a struggling Texas bank with $14bn in assets that US regulators have been trying to sell for the past six weeks.
Lex: Santander
Santander has done well in turning around its Brazilian bank, but is it time to cash out?
Santander’s decision to issue new shares equivalent to a 15 per cent stake in its Brazilian bank has therefore fuelled concerns that Spain’s biggest bank may secretly need more capital.One explanation is that Santander’s chairman,
Non-performing loan zones
Yesterday both Deutsche Bank and BBVA experienced the wrath of the NPLs — that is non-performing loans.
This was the relevant bit of Deutsche’s second-quarter statement:
Provision for credit losses was EUR 1.0 billion,
BBVA results fall on loan provisions
Shares in BBVA surged 4% on Tuesday after Spain’s second-largest bank beat forecasts with a 10% year-on-year decline in first-half net profits. The bank said profits for the half to end-June were €2.8bn ($3.9bn),
CDS report: Rally wanes amid negative earnings news
This CDS report was written by Markit’s Gavan Nolan
The rally in credit lost momentum today as earnings news turned negative on both sides of the Atlantic. The Markit iTraxx Europe index widened to 95.5bp,
BBVA offers staff five years’ leave
BBVA, Spain’s second-biggest bank, has asked some of its nearly 30,000 Spanish employees to take leave from work for up to five years in exchange for nearly a third of their usual salary and a guaranteed job when they return.
BBVA Q1 profits fall 14%
BBVA, Spain’s second-biggest bank, on Tuesday reported a 14.2% year-on-year decline in Q1 net profits, to €1.24bn ($1.6bn), as asset writedowns and bad loan provisions offset improved net interest income.
How tangible is the book?
Inevitable, really. Having whittled bank valuation metrics down to tangible book values, analysts are now starting to question how tangible those books might actually be.
An interesting note out of Citigroup this week focuses on the issue of deferred tax assets,