European banks

CoCos May Not Be As Good As They Look…But Investors Don’t Care

The European banks are having nothing but trouble in the last few months. And if they needed something else to further cloud their outlook – negative interest rates, meagre margins, increasing capital demands…- doubts have begun to emerge lately over whether the sector can continue to pay the high interest on the so-called CoCos (Contingent Convertible Capital Instruments), contingent convertible bonds.

The Cost Of Capital Is Rising –Yet It Is Hard To Estimate By How Much

Higher capital requirements after the financial crisis are pushing up the cost of capital for European banks. The key question is by how much, since the return on equity required in order to compensate investors for the risk they undertake can be difficult to determine because it is unobservable.

Others Are Doing Worse (But Everyone’s In The Same Boat)

Aristóbulo de Juan | This is the huge cost of complacency. You frequently hear Spanish bankers and supervisors repeating a new mantra: “The European banks are worse than ours and their supervision is more lax.” Europe’s oldest bank reveals an NPL ratio of 39%, while Deutsche Bank announces losses of 6.9 billion euros…but can this sort of management be allowed?

It’s Not All Bad About European Banks

UBS | What’s happening? Banks are trading at distressed PE and P/TNAV multiples. Emerging Market/China/ APAC slowdown and oil going to US$30 are potentially triggering a downturn in the credit cycle and concerns over credit/exposure quality in general.

UK banks' outlook

European Banks In Very Bad Shape; Still Losing Ground

Fernando Barciela | Is the banking crisis over? I don’t think so. There is a lot of very bad news coming out from some of the biggest European banks these days. Deutsche Bank said on Thursday it would shed 35,000 jobs. The German lender reported a $6.6 billion quarterly net loss. So it will trim its investment banking operations and close operations in 10 countries.

A hand shake

Europe’s barren landscape forces banks to make radical changes

BRUSSELS | May 7, 2015 | By Alexandre MatoPlans to spin off Deutsche Bank’s retail business is the latest rumour to emerge from a changing European banking sector eagerly looking for ways to be more profitable under Basel III regulations. Too big to fail institutions are worried about a decline in their margins because of the low interest rates outlook. For these lenders, breaking up their investment and commercial business, as well as going on a shopping spree within the sector, seem to be solutions for growth.


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Regulatory changes drive shift in banks’ traditional business model

MADRID | May 5, 2015 | By JP Marín ArreseBanks have undergone a massive overhaul to meet demanding requirements under Basel III. They have substantially strengthened their core capital over the last couple of years to keep abreast of increasing requests tabled by regulatory bodies. The leverage ratio under implementation represents a new challenge which is likely to have a significant influence on their business strategy.