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European economy 22nd June 2020

The Appeal Of Investing In Banks Is Very Strong: Expectations For Revaluation Are Close To 100% In A 1-2 Year Period

Ofelia Marín-Lozano (1962 Capital SICAV) | The starting point is much more solid than in 2008, when the banks emerged from many years of double-digit credit expansion and high rates. In addition, European banks have significantly improved their equity base, which is double, or even almost triple, the levels reached a decade ago in all their solvency ratios. The ratio of higher quality capital to risk-weighted assets, (CET1 or common equity tier 1) has risen from levels below 6% in 2011 to over 14% today. 

The ECB bets on buying private debt

European economy 19th June 2020

Demand For Financing From The ECB Reaches Record Highs Of €1.3 Tr, With Net Injection Of Near €550 Bn

Spanish banks have requested more than €97.9 Bn in the auction. Caixabank has already announced that it has requested 40.7 billion euros, the total to which it is entitled. Other lenders have also made their moves: €27 Bn requested by Sabadell, €21 Bn by BBVA and €9.2 Bn by Bankia. In Italy, Intesa and Unicredit have already reached € 70,000 and €93,000, the latter reaching its limit. Some systems in southern Europe (such as Italy) could have reached 85% to 90% of their total TLTRO limits.

germany reinvented

European economy 18th June 2020

Germany Reinvents Itself And Bets On Europe And High Tech

Lidia Conde (Frankfurt) |  German corporations are highlighting the risks of the global distribution of work, their weakness in the face of global value chains. Will work and production return to Europe, to Germany? It’s not clear. The pandemic has led to unprecedented reactions and almost unconditional support for Europe. It’s a way of helping yourself. Germany is expecting the worst recession since World War II, with the economy declining by up to 8% in 2020.

frankfurt sklyline

European economy 16th June 2020

Who Is Going To Pay In A Low/Negative Yield Environment?

Allianz Global Investors | That question is heard quite often in connection with the corona-related fiscal packages. While there is no shortage of suggestions of how the new public expenditure and old debt is to be funded, many people seem to be overlooking the fact that the current low or negative interest-rate environment is already making a major contribution to debt reduction. This article will analyse the impact of implicit interest rates, growth and inflation on debt ratios in Germany, France, Spain and Italy.

The ECB thinks that the European financial system could withstand even lower rates

European economy 12th June 2020

EU Strengthens As A Hub For Green Finance: 45.4% Of 2019 ‘Green’ Bond Issues Globally Were Denominated In Euros

In 2019, the euro consolidated its role as the second most widely used currency in the world at a considerable distance from the dollar, which retains its hegemony as the global reserve currency. The exception was in the area of green bond issues, where euro-denominated issues once again led the market. Specifically, according to data provided by the ECB, about 45.4% of ‘green’ bond issues worldwide were denominated in euros, compared to 25.7% in dollars and 28.9% in other currencies.

euro.growth

European economy 11th June 2020

The PEPP And The APP Programmes Combined Would Cover Almost 90% Of The EU’s Estimated Financing Needs

Intermoney | Based on the ECB’s macroeconomic forecasts, we can extrapolate that the financing needs of the EMU countries will be around €1.5 Tr between 2020 and 2021. And if 73.5% of the PEPP continues to be used to acquire sovereign debt from the different Eurozone’s members, the programme would cover almost 65% of the needs for this year and next. All this, without taking into account the €120 Bn from the reinforced Asset Purchase Programme (APP) and the €360 Bn that it should add up to mid-2021.

bank generico

European economy 9th June 2020

The Spanish And Italian Banks Are The Least Capitalized, With A CET1 FL Of 11.9% And 13% Respectively

Santander Corporate & Research | Yesterday, the European Banking Authority published its 2020 transparency exercise, which takes data from individual banks at end-2019. The EBA’s findings indicate that the EU weighted average CET1 fully loaded capital ratio stood at 14.8% in Q4’19. Also yesterday, the European Systemic Risk Board (ESRB) published a second set of measures adopted in response to the coronavirus emergency, which include a recommendation to restrict capital distributions until January 2021.

Retail Eurozone

European economy 5th June 2020

Quarantine Drives Eurozone’s Retail Sales To Record Lows

Bankia Estudios | Retail sales again recorded a sharp decline in April (11.7% vs 11.1%), driven down to an all-time low. By items, the rise in online sales stands out, showing a significant increase (10.9% vs. 0.7%), pointing to a change in the pattern of consumer behaviour. This could, in part, be consolidated in the medium term, although it is too early to draw conclusions. The rest of the items recorded sharp falls, although of lesser intensity than in March.

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European economy 4th June 2020

Lagarde Has Done Another Good Job

Olivia Álvarez (Monex Europe) | The ECB delivers on market expectations and steps up the total amount of quantitative easing under PEPP purchases by €600 billion. The rise outperformed the consensus call by at least some €100 billion, bringing along a stronger-than-expected market reaction. The program firepower, worth €1.35 trillion now, is set to channel the main recovery mechanism by the ECB, which is vocally reinforcing its accommodative stance amid the current recession environment.