Friday bank chart time, and as we like ambiguous messages, lets look at debt issuance by the Giips — banks across Greece, Italy, Ireland, Portugal and Spain.
The good news is that it is up a lot so far this year, $7bn or a hefty 16 per cent rise on the same period last year. Whooo.
The bad news is that it is still down a lot compared to, say, the same period in any of the preceding six years. Hoooo dear. Read more
We don’t know exactly what next year’s Asset Quality Review will involve yet, but we are starting to get a picture of what investors think about the ECB’s forthcoming burrow through bank balance sheets.
In short, given that it might not be all over until the end 0f 2014, everyone is feeling pretty good about the banks right now, and that might explain a surge of appreciation for European stocks. Read more
Spain’s Popular bank has got backing for a €2.5bn rights issue. But here’s the thing we think deserves a touch more attention — in the run up to the rights issue, Popular once again ramped up its holdings of its own shares, from 0.588 per cent in July to 3.979 per cent on the second of November (data here). We still find this odd…
The ECB may have granted loans to the Spanish bank sector on too low an interest rate given the quality of the collateral posted, according to an investigation by Die Welt. It potentially raises rather worrying questions about the bank’s risk control systems and whether it is even following its own strict lending rules. Read more
It includes an almost 80 per cent haircut on buying foreclosed land assets from banks. (“The transfer price is not a reference for the valuation of nontransferred bank assets.” – OK then) Useful to remember that pricing will be based on “real economic value” – which Ireland’s Nama showed can be an elastic term – but the presentation also says further “adjustments” will be made on top of that.
There’s also a “conservative” target of 14 to 15 per cent return on equity over 15 years for working out loans… while Sareb will spend €45bn on a first wave of loans transferred from Bankia and other particularly weak banks.
The Oliver Wyman report landed last week. The headline was that Spain’s banks would need almost €60bn in new capital and that seven out of the 14 Spanish banks under review failed the ‘bottom up’ test.
The actual recap figure was €59.3bn, falling to €53.7bn because banks are allowed to count in both mergers in which they’re involved and deferred tax assets. We expressed some scepticism about those DTA’s and the rather hopeful proposition that… Read more
Seven (many already nationalised) lenders, comprising 37 per cent of Spanish banks’ loan portfolios, failed and need more capital. Seven lenders passed.
It’s almost €60bn, as initial estimates had suggested in June. Read more
Should you worry about this kind of thing in Spanish debt?
As you mull over the leaked reports of what Draghi might say on Thursday and its implications for Spain’s banking system (and many other things), here’s an updated and stunning note on recent Spanish capital flight generally from Nomura:
The main conclusion from looking at the details of the country-specific balance of payments within the eurozone is that Spain is in a category of its own. While there are some outflows in countries like Portugal and Italy, the size of these outflows is not nearly as large as in Spain. On a 3-month rolling basis, Italy’s outflows represent about 15% of GDP currently, while they represent about 50% of GDP for Spain. Read more
Just a small thing from Spain’s latest banking legislation, but a telling thing…
A hat-tip to David Enrich for the spot.
This is from Banco Sabadell’s results at the end of July. It’s all about the consolidation of Banco CAM into its new parent. Read more
The Spanish bank posted a €4.4bn loss late on Friday night, requiring the Spanish government to inject ‘transitory’ capital “con carácter inmediato” months before a proper, EU-led restructuring and recap plan for the Bankia group is drawn up.
Yes, this bank is still a disaster zone. Read more
Click to enlarge.
A word of caution in advance: the optimal structure is deeply complex, which itself should raise concern in the minds of investors… Read more
It doesn’t come as much of a surprise that the Spanish financial sector is having to increasingly rely on ECB funding.
However, data released by the Bank of Spain on Tuesday reveals the sheer speed at which this happened: Read more
That’s Spanish 10-year bond yields hitting a new euro-era high of 7.434 per cent at pixel time according to Bloomberg data. Even more worryingly, Spanish short term borrowing costs continued to kick-up, with the 2-year composite yield touching 6.2 per cent as just about every tenor climbed. Read more
Fresh from being debated in an extraordinary session of the Finnish parliament…
A little bit of confusion about this one on Thursday.
Spain’s banks really are providing Finland’s collateral for the EFSF/ESM bailout of Spain’s (weaker) banks.
The Finnish finance minister announced a deal on Tuesday. Here’s the presentation (in Finnish, hat-tip Aleksi Moisio) Read more
Banking crisis U-turn of the year?
From the WSJ’s Gabriele Steinhauser and Brian Blackstone: Read more
How far will Spain’s bad bank be like Ireland’s?
There’s a superficially similar structure. Read more
Lend at low rates, for a long term.
It’s one way Spain’s official creditors could believably renounce seniority in the bailout. Concessional loans would make it easier for Spain to refinance its debt stock as a whole, improving bondholder recovery, while recapitalising its banks. Arguably. Read more
If German citizens are wary about the Spanish bank bail-out, we can only imagine how some Spanish are going to feel about it.
As Joseph wrote yesterday (via El Pais) the draft memorandum of understanding for the bail-out includes provision to force any bank seeking aid to compulsorily write-off their preferred shares and subordinated bonds. Read more
With a big hat-tip to El Pais, the draft memorandum of understanding for Spain’s bailout. We’re still reading through all the conditions imposed on Spanish banks…. Click pic for full doc
Featuring bank bail-ins for subordinated debt, notably: Read more
At an ungodly hour of Tuesday morning, eurozone ministers agreed that the EFSF will lend Spain €30bn for its banks by the end of July.
Two weeks. Read more
The Eurogroup finance ministers have inched things forward with their long Monday summit, but the press conference in the early hours of this morning also reaffirmed that many big questions remain.
The first headline is that Spain gets an extra year to meet its 3 per cent deficit-to-GDP ratio target. Just as well, because the country was extremely unlikely to hit that by the end of next year. The Journal reports that a draft statement says this means Spain can now run a 6.3 per cent deficit this year without risking penalties, compared with 5.3 per cent under the 2013 target. Read more
9 July 2012
Eurogroup Statement on the follow-up of the 29 June Euro Summit Read more
Spanish banks have been downgraded by Moody’s because of their counterparty exposure to the sovereign that backstops them which itself just had its credit rating downgraded by Moody’s because of its pledge to support the banks on which it depends for LTRO funding.
Or something. Read more
Spanish bank write-downs on residential mortgage loans, eh.
It’s something that had been vexing analysts before last week’s stress-test results from Oliver Wyman and Roland Berger, though these tests haven’t dived into individual bank loan books. That comes later. Read more