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’The EBA bank recap, broken down
No deleveraging because of our recapitalisation exercise, really — or if there is, you’ll hardly notice it. So says the European Banking Authority in a Thursday night release:
(Warning: pie charts follow)
Over three quarters of eurozone bank capital-raising will be about improving the capital side of the capital ratio,
Greek funny money
Greece is not printing its own money already. No drachmas are being issued by Greece, nor is there monetisation of public debt. However….
And with that rather tantalising intro — Stephane Deo of UBS blows the lid off something we’ve been wondering about Greece for a while.
Crunch de crédit continu (et collateral)
There’s a new ‘how is sovereign debt hurting you?’ question in the European Central Bank’s regular bank lending survey…
… which presents an interesting break-out of collateral concerns .
Just under one-third of banks said that sovereign pressures had affected funding between December and January.
LTRO smackdown
Dan Davies takes us to task over the ECB’s three-year liquidity to banks, and catalysing the (unsecured) funding market:
Oops. It’d be nice to be wrong. Lloyds — which didn’t borrow from December’s LTRO incidentally — really isn’t Barclays,
Is there a world outside EBA capital targets? [updated]
Update — FT Alphaville has heard that the answer to this question is in fact… yes. See below for more details.
The official EBA numbers on European bank capital shortfalls are out. In aggregate it’s €114.7bn.
Honey, I shrunk Emerging Europe
Eurozone banks selling assets in Emerging Europe – to tart up their capital ratios under crisis pressure – is not front-page news at the moment.
Frankly, we think it should be!
It’s a huge test case.
More on that looming crunch de crédit
The looming European credit crunch may not be the first thing on European leaders’ minds this weekend, but it’s coming, at least according to Citigroup.
Three of the bank’s European economists, Jürgen Michels,
The looming crunch de crédit
Whatever happens in the eurozone this week, banks will have new capital ratio targets. They are not going to raise enough actual new capital to meet them.
Ergo they flip the ratio and start burning off risk-weighted assets.
Crunch de crédit
Credit:
Crunch:
Both charts from the ECB’s latest lending survey of banks. Clear signs, we’d argue, that funding pressures did spike over the third quarter, and critically, to the extent that these pressures also pushed banks to choke off corporate credit — alongside signs of a deteriorating economy.
[Paul Donovan] The 21st century is when everything changes
With government finances still dealing with the aftershocks that are rippling out of the epicentre of the financial credit crunch, the world economy could do with a period of calm in which to heal.
Unfortunately,
What the China risk is
There’s been a bit of (somewhat post hoc?) concern in recent days over the cash crunch in Chinese interbank markets.
The one-week Shanghai Interbank Offered Rate went up, up… and then came down. Same stuff in the seven-day repo rate,
Home prices and the small biz credit crunch
There’s a fascinating new Cleveland Fed report making the rounds about the connection between depressed home values and the ability of small businesses to obtain financing.
We’ve delved quite a bit this year into the decline in small business lending,
Risky like it’s 2007
Call it the madness of markets or the easing of credit crisis indicators.
But high-yield debt, better known as junk bonds, is now trading almost at par value.
From Forbes:
The riskiest class of corporate bond has inched close to par for the first time since 2007.
Debunking subprime contagion
Flashback alert!
Fears raised that subprime crisis could spread – The London Times, April 2007
Sub-prime crisis could spread to other markets, IMF warns – The Independent, April 2007
The credit crisis spreads to Europe – Time Magazine,
Did foreigners cause the financial crisis?
That’s foreigners, as in non-United States. And it’s the thesis of MIT economist Ricardo Caballero that’s already setting the blogosphere aflame after it was highlighted by Time Magazine over the weekend.
Annals of historical credit crunch comparisons, medieval edition
The current crisis has been compared to many a historical slump, including the 80s housing crash, the 90s Savings & Loan crisis, the panic of 1907 and of course, the Great Depression.
But this is the first time we’ve seen the crisis compared with ‘ye olde credit crunch of 1294′.
Crisis? What crisis?
How quickly markets forget. From UBS.
Related link:
Market sentiment: Faber et al take on ‘green shoot ennui’ – FT Alphaville
Welcome to the Museum of Natural Credit Crunch
Presenting a new display at New York’s Museum of American Finance.
Related links:
The credit crisis is already fodder for a museum – FoxBusiness
Solution to credit crunch found!
Just make everyone — including the banks — look attractively trustworthy.
From Rice University (HT Alea)
New research suggests that a person’s appearance may play a role in whether they are deemed trustworthy by financial lenders.
Prospects for US high-yield debt grim, says S&P
One of the more interesting [read: useful] bits of Standard & Poor’s is their Global Fixed Income Research unit, led by Diane Vazza in New York.
Take these snippets from the unit’s latest report on the prospects for US high-yield debt (emphasis FT Alphaville’s):
Chinese liquidity -and stocks- go BOOM
This is an arresting chart.
From Standard Chartered, it shows loan growth in China — nominal and real. The country’s central bank said last week that Chinese banks extended a record 1.62 trillion yuan ($237bn) worth of loans in January.
State of credit
There’s been much talk recently of a possible turning in credit conditions.
This chart from Deutsche Bank sums up the issue nicely. As can be seen most recently, yes, there’s been a reduction in the number of US banks reporting a tightening of credit conditions — but at the same time,
Airbus prepares to double vendor financing
Airbus is preparing to double the amount of vendor financing it offers to about €2bn next year to support commercial aircraft sales and maintain deliveries as its customers struggle to obtain funding from traditional sources such as banks and lessors.
Credit Crunch for sale
Can’t get enough of the credit crunch? Then hurry down to Selfridges for financial crisis in chocolate form.
This must be the most depressing marketing ploy ever — even if the product is “a more-ish marriage of the very best velvet-rich Valrhona chocolate,
What credit crisis?
Bank of America analyst Jeffrey Rosenberg lives in a better world than ours (just kidding).
From an Oct. 10 note:
Of course, the market is gripped with fears over the credit crisis. However, we could take the point of view that credit markets are simply unwinding what was actually previously a credit mania,
Vultures circle distressed debt
Since the credit crunch hit last year, the distressed debt industry has been undergoing a somewhat surprising shake-up. In recent months, bankers in distressed debt trading, research or proprietary investing have been quietly leaving long-held positions.
Tin Hat Time!: FT Alphaville’s credit crunch anniversary video
If you’re missing the – err, well, you know, the razor-sharp analysis and pithy one-liners of FT Alphaville’s Paul Murphy (while he tries, in his island hideaway, to forget we all exist), see FT.com’s video,