Posts tagged 'Bailout'

On Ireland’s apparent nakedity

We should probably view Ireland’s decision to exit its bailout sans precautionary credit line more like a scarf dance than a total strip show

Ireland has evidently decided that the cost of not having a pre-arranged ECCL exceeds the cost of negotiating an ECCL under duress. The characterisation of ECCL/no ECCL = OMT/no OMT is too simplistic. The reality is a matter of degree. Not having an ECCL does not rule out OMT, it merely slows the ECB response down as an ECCL would have to be negotiated and approved first.

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Credit where credit is due

It’s bad enough having the most expensive bank bailout around. But not getting official recognition for it? Unbearable!

Luckily for Ireland, there’s a concerted effort underway to right that wrong… (h/t Nama Wine LakeRead more

A €5bn Greek bond imminently falling due? Did we mention we have deckchairs by this abyss?

So, we’re going to the wire once again in the now traditional dance between Greece and the troika. As the FT reported on Thursday:

Eurozone leaders face a new round of brinkmanship over Greece’s €174bn bailout after international lenders failed to bridge differences on how to reduce Athens’ burgeoning debt levels, pushing the country perilously close to defaulting on a €5bn debt payment due next week.

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Haldane on why King Kong & Godzilla, like big banks, are inefficient structures

First a reminder about this coming Monday, October 29th.

Andy Haldane, the Bank of England’s executive director for financial stability, will be giving a talk at Friends House, right across the road from Euston station. FT Alphaville is very happy to be chairing. Kickoff is 6pm.

While the event is free, you do have to reserve a seat. Click here to do so. Read more

Rajoyed

Spotted on Tuesday — a market getting itself in a lather as soon as the Spanish prime minister denies that a bailout is ‘inminente’. (Via Google Finance)

A Spanish shopping list [updated]

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Do bailed-out banks remain bad, while good banks behave better?

The trauma and cost of a public rescue must surely teach the bank management concerned to behave in a more prudent manner, right?

Wrong, according to a recent Bank of International Settlements paperRead more

Spain’s funding costs post a Draghi-ing

So, we are days from finding out what the ECB is planning to do… or at least, days away from knowing more than we do now.

But immediate largesse in the bond market isn’t the only bit of help that should be concentrated on. There is still Spain’s bank-bailout to consider and where its costs should ultimately lieRead more

Implementation, implementation, implementation

Then and now the key to the door of the eurozone’s success survival, especially given the currency union’s propensity for contagion.

There may be a relief rally because of utterances by European Central Bank President Mario Draghi, but speaking on behalf of investors: it’s hard not to feel a bit let down lately (understatement). Read more

Credibility

April:

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Spanish bailout divination

Spanish prime minister Mariano Rajoy on Wednesday:

We can’t finance at current prices for too long. There are many institutions and financial entities that have no market access. It’s happening in Spain, it’s happening in Italy and in other countries, that’s why this is a crucial issue. Read more

Some Eurogroup statements for your consideration

Spain on the left and Cyprus on the right. Click the images for the full documents:

The Spanish bank buy-back riddle

So, this is a bit odd. Why would some Spanish banks, which have such high capital needs right now, have been engaged in fairly significant share repurchases over the past few months?

Spanish banks such as Bankia and BBVA have been buying their own stock in increasing quantities since February, with Banco Popular much more active than the rest recently. Read more

Cyprus needs bailing, says Cyprus

This had been a long while coming… Flashes from Reuters at pixel time:

16:57 – CYPRUS APPLIES FOR EU BAILOUT  - GOVERNMENT STATEMENT Read more

Fitch junks Cyprus

(Alternate title: Fitch junks incoming EU president.)

Fitch has cut Cyprus’ credit rating to ‘BB+’ from ‘BBB-’. That’s a junking and, shockingly, it’s down to the banks. From Fitch (with our emphasis): Read more

Spain at 7 per cent

This has been widely pre-announced on Twitter. But, according to Trade Web figures, Spain’s borrowing costs on10 year paper spiked up through 7 per cent at 9.55, London time…

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That Spanish revolver

Genius pic from A Lightening War for Liberty

Spanish bailout in one photo Read more

Now they’ve shut Italy off from the markets…

Was this part of the plan? Italian 10 year at 6.20 per cent on Tuesday, and rising?

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Can someone tell this “EU Source” to shut up?

Click to read

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And at the beginning of the 14th week… (updated)

ECB data published on Monday showed that it once again resisted intervening in government bond markets last week, taking its non-interventionist run to 13 weeks. Read more

Just buying time?

On Monday morning, a relief rally took place in markets around the open-half of the globe as investors digested the bailout of Spain’s banks, as announced by the Eurogroup.

The move was, of course, recognition of what was known for a long time — that Spain could not backstop its ailing bank sector alone. It would seem, however, that Monday’s rally might already be losing steamRead more

*Failout*

*Reverse Can Kick*

Go on, give us your best label for this: Read more

Spailout reaction

And… we’re up:

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‘The Eurogroup supports the efforts of the Spanish authorities…’

Or, up to €100bn in EFSF and/or ESM loans channelled to the bank recap fund (with conditions on structural and bank reforms but without specific fiscal demands), while Spain itself carries on issuing in the market.

Click image for full Eurogroup statement:

#NoEsUnRescateEsUnSaqueo

Trending, rápidamente in Spain on Saturday…

It means “Not a rescue, it’s a looting.” H/T @pdacosta Read more

Bankia going GUBU … but what about the rest?

Oh, Bankia” has become a common refrain around these parts and this morning Joseph pointed out a few of the oddities surrounding Spain’s incipient bailout and a similarity or two with Ireland’s.

(What’s Spanish for GUBU again?  H/T Conor Cruise O’Brien and Nomura’s Daragh Quinn). Read more

ELA stumble du jour

This delightful misstep was pointed out by Ralph Atkins over at FT Money Supply. Apparently in the rush to distance Belgium from any suspicion of Emergency Liquidity Assistance, Luc Coene, Belgium’s central bank governor may have turned snitch on Portugal.

As Ralph notes, we know ELA, which is essentially a bank bailout by national authorities when things get really, really bad, has been heavily used in Greece and Ireland. Read more

Cypriot banks and some sneaky ELA [updated with Portugal]

FT Alphaville has been very curious about the €18bn of mystery Emergency Liquidity Assistance which showed up in the ECB’s financial report at the end of April, but until now we weren’t sure where the cash had ended up.

We had a few guesses of course, but no proof. ELA is essentially a bank bailout by national authorities when things get really, really bad and it is typically lending (or a repo) against collateral the ECB itself won’t accept. Read more

Bankia in the coalmine, looking like a dodo

The Spanish government may be bailing out Bankia by injecting cash in return for contingent convertibles to the tune of some €7-10bn, but many analysts have reacted with something along the lines of: “Haha! That’s cute! They are like ever so slightly less delusional about the trouble their banking sector is in! Adorable!”

Bankia is no canary in a coalmine. It’s more like the first sign that the inevitable support of the banking sector is finally materialising. Indeed, prime minister Mariano Rajoy was quoted saying: ”If it was necessary to reactivate credit, to save the Spanish financial system, I wouldn’t rule out injecting public funds, like all European countries have done,” in an interview with radio station Onda Cero, as reported by the WSJ. Finally playing catch up, are we? Read more

Finally, a truly Popular bailout!

Cyprus is apparently preparing a bailout for its second biggest bank which could come in at near 10 per cent of GDP.

This is from the Cypriot press (poorly Google-translated – sorry – and now apparently removed and replaced by a much blander article; although Reuters looks like it saw the same thing so we are not going mad): Read more