Wall Street freeze thaws for some euro peripheral banks


Wall Street

True enough, the dam of icy mistrust between US investors and southern European banks would be only melting for the big ones.

But lately, good news in matters related to the euro zone are rare. That is why the financial City of Madrid celebrated in most of Friday’s technical reports that Bank of America purchased a $1 billion loan portfolio from Banco Santander, while BBVA sold $2 billion in senior debt.

According to Link SSV in Madrid, BBVA “opened books Thursday morning and received demand for $2.5 billion during the first 30 minutes, reaching $7 billion later in the day.”

There is more. Pimco, the world’s largest mutual fund, has reportedly raised by 9 percentage points its holdings of sovereign bonds from the most indebted European countries for its Total Return exchange traded fund. The mutual fund would have spent $2.9 billion in debt from Santander, Intesa San Paolo and others. Black Rock would have added debt from Santander, too, to the $3 billion Total Return Fund. Aliance Bernstein, would have purchased BBVA’s bonds for its $5 billion High Income Fund.

“It’s finally positive news for the Spanish financial sector,” analysts at Bankia Bolsa said today, “as it implies a receding aversion against bank risks. Even though foreign investors’ interest seems to be focused on our two big entities, it is a cheerful sign.”

At home, some Spanish banks appear to be all set for mending their relationship with domestic shareholders. Banco Popular has recently offered owners of preferred stock (€200 million in outstanding shares) the option of recovering 100 percent of their investment, or an exchange for the new securities of its €2.5 billion capital increase.

This operation has attracted 14 other entities to carry out the placement of the new securities, Deutsche Bank among them.

And 93.8 percent of CaixaBank shareholders have accepted their dividend payment in stock. CaixaBank will issue €79.881 million shares, a capital increase of €230 million. The stock will be available for trading from October 10.

Whether the perception of the Spanish risk has improved, though, will become more evident in the second half of this month. From October 10, Spain’s banks will begin publishing their results in the third quarter of the year.

About the Author

Victor Jimenez
London contributor at thecorner.eu, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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