What happened with all that European bank deleveraging?
Some of it is over with, says Barclays — leaving, by our estimates of their estimates, about €650bn* of deleveraging yet to be carried out among the major European banks they cover**. Quite big, but much less than the €1.5tn – €2.5tn being discussed late last year. Read more
What links Hershey to the eurozone debt crisis? Well, aside from making a product that cracks under pressure, the confectioner has recently renewed a syndicated lending deal that Nomura’s analysts say augurs further European bank deleveraging.
Although European banks can now post lower rated collateral to access ECB funds, continuing funding pressures, EBA requirements and Basel regulations will ensure further sell-offs. We’ll know more later on Thursday, when EBA stress test results are disclosed. Thus far, European banks have announced around €1,200bn worth of planned sales and run-offs, as this chart from Nomura depicts: Read more
Looking forward to the new year yet?
After a likely outright contraction in GDP in 2012, in the creditless recovery that we envisage the pick-up in GDP growth is likely to be slow and shallow. Read more