ECB


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EZ investor confidence dropped to its lowest level in a year

MADRID | The Corner | The Eurozone Sentix Index fell 2.7 points in August, its lowest level in a year, from 10.1 reached in July. The analysts’ consensus had expected that the indicator would go back to 9 points. Sentix attributes in a press release this decline to the approved economic sanctions against Russia and points out that “As this slump derives from an event which is subject to politics and power play, the central banks, particularly the European Central Bank, will have difficulty in trying to counter this.”


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BCE: Widespread decline in interest rates of banking corporate credit

MADRID | The Corner | The ECB reported on Thursday the data of interest rates applied in banking corporate loans in June, which have been reduced by 18 bp in loans worth up to €1M for the EZ (up to 3.57%). Moreover, these discounts have been widespread and even higher in peripheral economies’ banks: -21 bp up to 4.3% (weighting by GDP of rates applied in Spain, Italy, Ireland and Portugal).

 


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ECB: credit standards on EZ loans eased for the first time since 2007

MADRID | The Corner | A further sign of a recovery in credit: standards on loans within the eurozone have been eased for the first time in the 2Q in seven years, just before the financial crisis bursted, the ECB said in its regular Banking Lending Survey released on Wednesday. Net demand continues to recover for both household and enterprise borrowing. However, as we reported, the open bar announced by Mr Draghi won’t have an impact on loans until 2015 and, meanwhile, credit fall continues to accelerate in some peripheral countries, especially in Spain and Italy.


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The (bonds) Hunger Games

MADRID | The Corner | In the next few days demand for Spanish bonds is expected to grow, since Spanish debt auctions will be held and European CPI data showing that prices remain very low will be released.


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EU banks reach debt holdings all-time high

MADRID | The Corner | European banks have increased their holdings of govies in June by +0.1% m/m (+1.4% y/y), with one somewhat higher increase in the periphery (+ 0.6% m/m and – 1.2% y/y), mostly of a +8.6% in Ireland and +1.8% of Portugal. According to the ECB, EU lenders have reached a new all-time high of 1.8trn debt holdings, while peripheral banks are approaching 2013 numbers (€830bn vs €840bn in June 2013).


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ECB: AQR results will be included in stress tests

MADRID | The Corner | ECB’s upcoming stress tests will have have the AQR findings incorporated (the so-called “join-up”), an element that was previously missing. And banks will be informed of the full and final results only shortly before they are communicated to the markets, as the central bank published on Thursday


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Why hasn’t the Euro fallen more?

MADRID | The Corner | The EUR/USD dropped nearly 4 cents from its maximum area in 2014 (very close to 1.40) with a movement that began on 8 may, when Mario Draghi announced that a package of monetary stimulus / liquidity would be used at the June 5 meeting (refi rates drop in 10bp, negative deposit type, completion sterilization SMP and quarterly TLTRO). Why hasn’t the Euro fallen more?

 


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Espirito Santo: Flight to quality

MADRID | By J.P. Marín Arrese | The troubles faced by Banco Espirito Santo ’s main share holding group have delivered a widespread blow to financials and periphery sovereigns. A nasty reminder that Eurozone doesn’t seem so stable as everyone bet it was. Investors are flying to safety, pushing the US Treasuries and German bunds close to past records. Stock exchanges and market sentiment are bound to undertake brisk U turns, at no warning. The more so as sharp and continued rises always offer a good excuse for a sell-off. There is nothing to worry about.


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ECB’s Praet: TLTRO will break the lack of credit’s vicious circle

MADRID | The Corner | Upcoming TLTRO in Sept 18 and Dec 11 will allow EZ banks to borrow an amount equivalent to 7% of what they currently lend to the private sector at 0.25% a year (excluding interbank loans and mortgages), breaking the vicious circle of high lending rates to companies, high credit risk and a sluggish economic performance, European Central Bank’s chief economist Peter Praet said on Wednesday.