Gregor Peter‏@L0gg0l39 s
Greece needs extra funding because of bigger than expected bank-recapitalization needs, Kathimerini says
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_06/05/2013_497490
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The ministry of finance issued a decree declaring Thursday and Friday as bank holidays. As Monday is also an established holiday, banks will re-open on March 26. The government hopes that by that time it will be able to work out a way of raising 5.8 billion euros (7.5 billion US dollars) demanded by international lenders before they consent to a bailout for Cyprus worth 10 billion euros. The Cypriot parliament on [...] Thanks to fears over government regulations, there’s a massive $1.46 trillion treasure chest sitting idly at the Fed, excess reserves from skittish US banks. And it’s forecast to reach a startling $2.6 trillion in the next year.
This cash doesn’t do anything for the American economy, say leading analysts… < snip >
The banks see it as an asset to be accessed to meet government regulations such as recapitalization programs, toxic asset purchases and [...] by Phoenix Capital Research
Europe’s banking system has been on the ropes for years. It’s a little known fact that the largest recipients of US bailouts were in fact foreign banks based in Europe. Also bear in mind that the biggest beneficiaries of QE 2 were European banks. Things got so bad in mid-2012 that the whole system lurched towards collapse. The only thing that pulled the EU back from the brink [...] by Phoenix Capital Research
By the look of things, Europe’s banking system is breaking down again.
Bankia’s shareholders have received a nasty new year’s surprise. They may lose most of their investments or even all of them says the Spanish bank rescue fund in its latest report.
According to FROB, the Fund for Orderly Bank Restructuring, Bankia has a negative value of 4.2 billion euros, and its parent group BFA is 10.4 bn in the red.
Valuation [...] Greece’s default clock is ticking louder than ever as the country struggles to raise funds for a €5bn debt repayment by the end of this week. Meanwhile international lenders are failing to agree on how to reduce Athens’ debt. On Friday the country must repay 5bln euro of maturing short-term bonds held by the European Central Bank, but without its next 31bln euro tranche it’s not clear how this issue will [...] Oct. 4 (Bloomberg) — The Cypriot government will seek an 11 billion-euro ($14.2 billion) bailout, 62 percent of gross domestic product, to recapitalize its banks and pay its bills, according to three people with direct knowledge of the matter. The country’s banks, which lost more than 4 billion euros in Greece’s debt restructuring earlier this year, need 5 billion euros of fresh capital, according to Finance Minister Vassos Shiarly, the people said. The [...] Spain’s banks face a capital shortfall that could climb to 105 billion euros ($135 billion), almost double the estimate the government provided last week, according to Moody’s Investors Service. The nation’s lenders may need infusions of 70 billion euros to 105 billion euros to absorb losses and still keep capital ratios above thresholds outlined in legislation last year, Moody’s analysts wrote yesterday in a report. That compares with the 53.7 billion euro shortfall found [...] MADRID (MarketWatch) — The Moody’s Investors Service review of Spanish sovereign debt could come as soon as the close of Europe or U.S. markets Friday, say analysts. Moody’s said in August its review on Spain’s Baa3 rating would continue through the end of September, which is this Sunday. At the time it also said it was waiting on more information on recapitalization needs of Spanish banks, which is coming at [...] While the EU Commission is worrying the remains of the 100 billion euros ($122 billion) intended for recapitalizing Spanish banks will be used for other needs such as bond market intervention, Angela Merkel is having a tough time trying to persuade Germ “The up to 100 billion euros, which the euro zone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and [...] ATHENS–Greece has enough cash reserves to meet the government’s operating needs until at least early August and possibly longer, two government officials said Tuesday, despite earlier warnings Athens could run out of money as early as this month that had once again stoked fears of a payments crisis which could risk endangering Greece’s standing in the euro zone. According to people familiar with the matter, further spending restraint, a small EUR1 [...] Germany dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spain’s banks as the euro-area debt crisis simmers. Finance Minister Wolfgang Schaeuble dismissed “false expectations” raised by euro leaders last month that the economically troubled euro zone would act quickly to unify the oversight of its banking system. “It will take time, it’s complicated, it isn’t easy to do,” Schaeuble told reporters before a meeting of [...] Germany ensures that the direct aid to the Spanish bank will not reach this year The German Finance Minister, Wolfgang Schäuble, believed that direct aid to the Spanish banking sector may not be in 2012 because before we need to create a common banking supervisor, a body which will not come into operation this year. In an interview with El Pais, Shauble ensures that those who think that aid to the banking [...] http://www.twitter.com/lindayueh EU AIDE SEES LITTLE SUPPORT FOR FINNISH COVERED-BOND PROPOSAL http://www.twitter.com/zerohedge By David Marsh, MarketWatch MADRID (MarketWatch) — The major German concessions (above all, over the use of ESM European rescue funds directly for Spanish banking recapitalization) agreed at the euro summit are unlikely to enter into force. The compromises announced on Friday between creditors and debtors will fall apart because they are mutually contradictory. The good news (of sorts) is that the European Central Bank is out of the firing [...] This late night European Union Summit had some achievements. France, Italy and Spain insisted on focusing on measures for the current crisis, and not only long terms visions. The leaders agreed on allowing the bailout mechanism to directly recapitalize banks – a move that allows lifts the burden off Spain. In addition, the ESM will have no seniority, thus expected not to scare off private investors.
Spanish yields are falling and EUR/USD reached [...] http://www.twitter.com/FGoria By Sarah Turner SYDNEY (MarketWatch) — A late Thursday night meeting of European leaders came up with a plan for a single financial supervisory mechanism for the region to help stabilize markets. European Commission President Herman van Rompuy said that the mechanism will involve the European Central Bank and that there will be the possibility of direct recapitalization for European banks. Financial assistance will be provided by the European Financial [...] With all the europhoria over Greece, some may have forgotten Spain. It is time to remind them that the real “fulcrum country” of Europe has now shifted a few thousand kilometers to the West, where as also reported on Friday the pain will come primarily from more home price declines (up to another 25% lower from here), and loan loss recognitions. How much? As Market News reports, the number may be as large [...] This weekend, everyone’s attention will be on the Greek elections, however it is Spain that has now become the “fulcrum security” of Europe. As such, events in Greece are merely a catalyst that will set off a chain of events that will have an impact not only on Spain, but on all of Europe, and thus, the world. As we pointed out last week after the Spanish bailout announcement, based on [...] It just gets more and more mind-numbing by the moment.The latest from Europe, which earlier confirmed that ESM loans would get preferred creditor status: SPANISH BANK RECAPITALIZATION LIKELY TO BE IN EFSF BONDS, SIMILAR TO GREEK RECAPITALIZATION – EU OFFICIAL MADRID (AP) — Spain could ask for a rescue of its troubled banks this weekend when European finance ministers hold an emergency conference call Saturday to discuss its hurting lending sector, a move that would turn the nation into the fourth from the 17-nation eurozone to seek outside help since the continent’s financial crisis erupted two years ago. The ministers will discuss a potential bailout for Spain as pressure mounted on [...] Reports citing European sources state that Eurozone finance ministry officials, followed by finance ministers themselves, will hold conference calls on Saturday. A formal request for Spanish EFSF/ESM/IMF support, solely for the purposes of bank recapitalization, could be announced after these calls, and appears to be the motivation for them. As JPMorgan notes, while the timing of such a request would come as something of a surprise, the substance does not. JPMorgan [...] Bankia, Spain’s fourth-largest bank, could get less than the 19 billion euros (US $23.68 billion) in aid it has asked for, two sources said on Tuesday, prolonging uncertainty surrounding a rescue that has added to fears that Spain itself would need a bailout. The 19 billion euros would be on top of about 4.5 billion euros Madrid has already put into the bank. Spain’s government is in the process of nationalizing the [...] The current plan for the European Stability Mechanism, the EU’s permanent bailout vehicle, does not include direct recapitalization of the bloc’s banks, a spokesman … http://online.wsj.com/article/BT-CO-20120531-705768.html via Bloomberg: Spain plans to inject public debt instead of cash directly into the Bankia Group to pay for the bank’s recapitalization and avoid having to go to market with the instruments, El Pais reported, without citing anyone. Until now, to pay for bank bailouts, the state would sell debt in the market through its bank rescue fund, known as the FROB, and use the cash to aid banks. A jump in yields has made [...] By Yiannis Papadoyiannis The Greek credit system is slowly reverting to normal after the significant turbulence witnessed over the course of last week, as bank officials are now suggesting that the deposit outflow seen in the period right after the May 6 election has subsided. They said that the bleeding of bank accounts had almost stopped on Friday and yesterday, while local lenders are still eagerly anticipating the transfer of 18 billion [...]
We already posted a full run down from JPM on what the immediate costs from a Greek EMU exit would be (starting at €400 billion and going higher), but one point that bears repeating is just how much borrowing capacity Greece has under the ELA in the aftermath of today’s news that the ECB is leaving Greek banks to fend for themselves until such time as the Greek recapitalization payment is wired [...] All the politicians in Greece (even the mainstream ones) have said they want to renegotiate the bailout agreement.
If the rest of Europe doesn’t back down and agree to this, then the ECB will have to make a huge decision. From JPMorgan Unless Greece chooses to leave the Euro area, which we doubt will happen, a Greek exit will require the rest of the re-gion to push the country out. The mechanism for [...] |
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