Posts tagged 'SMEs'

Ireland’s tight-fisted banks

A fascinating chart from Morgan Stanley’s European banking research team caught our eye. See if you can spot the odd one out (click to enlarge):

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The SME demand-side problem

In a new analysis the Federal Reserve Bank of Cleveland looks into the question of why small business lending isn’t what it used to be.

While it’s hard to pinpoint one definitive reason, they do note it’s clear that there is validity in the theory that SME lending is suffering from an ongoing demand-side problem related to soft demand for SME products and services. Read more

NPLs and lights in dark places

Consider this chart from JP Morgan’s Flows & Liquidity team. It shows the evolution of non-performing loan ratios (as percentages of total loans) across three different Euro area blocks: Germany, core and periphery.

The definition of a non-performing loan (NPL) differs across countries but the picture is definitely not pretty. Read more

Spanish yields and the ECB’s austerity defence

The chart above shows the decline in Spanish bond yields “occurring at a time that Spain has announced that it had not hit its deficit targets and would not hit next year’s,” as David Watts of CreditSights points out. Read more

Return of the large caps

Between 2000 and 2010, European large caps underperformed mid caps by 28% and lagged small caps by 47%.

And yet, the equity strategists at Morgan Stanley recommend investing in large caps in 2012. The decade of underperformance has been reversing. Relatively, anyway, as they go on to write… Read more

Let there be credit claim collateral

OK — you’re sick to death of hearing about the European Central Bank’s three-year liquidity may, or may not, get banks to buy sovereign debt to pledge as collateral.

So why not hear about all the other extra trash assets the ECB will now accept? Potentially much more economically critical trash. assets. (Update — well, that’s our point about these assets being diverse and difficult to value made for us… we’re sorry for calling them trash. That is indeed unwarranted hyperbole. In truth the assets here vary widely in type, quality, etc. The main thing is their basic economic importance, which is why the ECB’s move is not to be underrated.) Read more

How much bad debt can China’s banks take?

China’s inflation rate fell in September, which is what pretty much everyone wanted.

Only a small decline though — to 6.1 per cent from 6.2 per cent in August. The food price inflation rate remained the same at 13.4 per cent. So, the strategists say Friday’s figures won’t be enough to prompt any monetary easing. That brings us to Chinese banks’ bad debts… Read more

Her Majesty’s SME CLOs?

It’s like putting your foot on the accelerator but because the transmission mechanism isn’t working properly, the car wheels don’t respond.

Actually George, that might be because the car is on fire, and the wheels have blown off. Read more

Credit squeeze drives change at China’s SMEs

As China seeks to rein in stubbornly high inflation, measures to tighten borrowing have prompted fears that the country’s small and medium-sized enterprises (SMEs) will be hit hard, as credit is channelled instead to large state-backed companies, the FT reports. But the real picture is more complex. Rather than facing a widespread credit squeeze, the SME sector is undergoing a painful process of restructuring. Capital is being funnelled towards high-tech and green energy-related companies at the expense of traditional low-end manufacturers.

Banks ‘behind the curve’ on SME lending

The UK trade minister, Stephen Green, has warned bankers must deliver on their commitments under the Project Merlin deal to increase lending to small businesses. Efforts to boost exports will be hamstrung if small and medium-sized enterprises (SMEs) do not have access to finance, Lord Green said. The FT reports that the former HSBC chairman, who had refused to comment on the banking sector since taking up his junior ministerial post five months ago, broke his silence to urge the banks to honour their pledge to increase lending to small and medium-sized businesses.

Project Merlin’s (unprofitable) magic wand

The UK coalition government waves its magic (Project Merlin) wand over the nations’ banks — and presto — less bonus-y, more responsible, £190bn-lendier banks.

It’s worth remembering, though, why banks have tended to veer away from lending to small- and medium-sized businesses in recent years. It’s not been very profitable. Read more

UK banks sorcery

The Government today welcomed the commitment by the UK’s biggest banks on lending expectations and capacity, the size of the 2010 bonus pool, pay disclosure and support for regional growth and the Big Society.

This statement by Barclays, HSBC, Lloyds Banking Group, RBS and, with respect to lending, Santander, follows a period of discussion between the Government and the banks, known as Project Merlin…

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China asks JPMorgan to help SMEs

China’s powerful state planning body has asked JPMorgan Chase to invest about $300m in a scheme to provide credit guarantees for the country’s small and medium enterprises, reports the FT. The request, from China’s National Development and Reform Commission, met a mixed reception at the US bank, said people familiar with the matter. It comes as JPMorgan, which on Friday reported record earnings of $17.4bn for 2010, plans a big push in China under Zili Shao, who became head of its China operation a year ago. Last week, JPMorgan gained approval for its first securities joint venture in China. It also has several other initiatives in the works that require regulatory approval, said insiders.

SanDOWN in Lloyds ABS! Moody’s still making mistakes

Last week, Lloyds Banking Group became the first UK bank to sell bonds backed by loans to small and medium-sized enterprises — an SME CLO — since the asset-backed market basically shut in 2007. But, reports FT Alphaville, a Moody’s error may have cost Lloyds an additional £20m in the deal. Read more

O, debito moratoria at Italy’s banks

Italy has extended the moratorium on business debt it began in August 2009, reports FT Alphaville. The agreement, between the Italian Banking Association (ABI) and Confindustria (Association of Industrial Corporates) gives small and medium-sized businesses the ability to put off paying a loan’s principal for up to a year. Read more

Spanish debt data point du jour

Delinquency rates for Spanish small to medium enterprises have begun to stabilise, Fitch reported on Wednesday.

While this is fairly good news, the data seem to underline how far Spain still has to go in solving its private debt problem, and thus in reforming its banking system and fiscal position. Read more