MADRID | The Corner | The first quarter of the year is usually the best for lenders, and yet major European entities are showing the weakest results since Q1 2009: net profit fell once more (-9% yoy) to a pale EUR 12, according to a report by Deutsche Bank Research. Potentially high litigation costs and the upcoming ARQ and ECB’s stress tests make them eager to strengthen their capital buffers.
MADRID | By Álex García
BEIJING | By Andy Xie via Caixin | Stimulus proposals won’t transform the economy in China, but spending on industrial research, building megacities and globalizing the white collar labor force will.
MADRID | By Ana Fuentes | Now that the ECB will charge banks for keeping them their money, don’t be surprised if some short-dated core sovereign bonds start yielding negative, Bond Vigilantes remark. Actually we’ve seen that before in the EZ: in August 2012, German authorities received with open arms 750 billion euros in deposits of its eurozone neighbors, mainly Spaniards and Italians. That intense demand drove the prices of short dated bunds to levels which produced negative yields.
MADRID | By Julia Pastor | In a historic move, the ECB cut the benchmark rate to 0.15 percent from 0.25 percent, and reduced the deposit rate to minus 0.10 percent from zero, becoming the world’s first major central bank to use a negative rate and pushing entities to increase credit lending. Spanish Ibex35 reacted to the news with a 0,8% increase.
BEIJING | By Yang Kaisheng via Caixin | A monopoly on either the buyer’s or seller’s side often means one or several enterprises relying on their strengths keep squeezing out or forcing the merger of small and medium-sized enterprises to gain unfair pricing power. It is often caused by a monopoly over resources or entry barriers that result from government intervention. In light of this, is it reasonable to say that China’s banking industry is monopolized?
ATHENS | By Manos Giakoumis via MacroPolis | The core Greek banks reported first quarter (Q1) results in the last three days of May. The release of the results was the last act in a series of important developments for the Greek banking market over the past two months. These developments constitute the third phase of the new era for Greek banks, which started two years ago.
LONDON | By Barclays analysts | We believe that one of the reasons why loan growth has been so anaemic thus far in the recovery is because the recovery in capital spending has been very poor. However, an improving outlook for Capex could see loan demand pick-up and be supportive of future earnings growth for the domestic banking sector.
MADRID | By Jaime Santisteban | European Banking Association and the Bank of Spain agreed to take into account borrowers’ non-property guarantees to assess the situation of Spanish entities in the upcoming stress tests. Bankinter analysts believe that “such guarantees, which are usually pledging of assets like deposits, shares and/or by consignatures, mean a certainty of collection for banks.” Also, Amadeus has been one of the most attractive values in the Spanish Ibex 35.
MADRID | By The Corner | In its first surveillance report after the Spanish banking sector bailout, the EC believes that entities are stronger and cleaner. Even if NPLs ratio has not stabilized, banks “are shifting towards more stable funding, such as deposits, and are relying less on borrowing from the Eurosystem.” As market access conditions have greatly improved, Brussels Spain’s return to positive economic growth (using February data, when growth estimates for 2014 were 1% instead of 1.1%) and was positive about the labour market slight improvement, although it warned that jobless rate remains very high (26% 2Q13). Brussels considers that unless further austerity measures are adopted the crisis-battered country won’t meet its deficit goals.