Benjamin Cole | The econosphere is again rumbling about Chinese debt and China banks, evidently forgetting the long serious faces made many times about Chinese debt and China banks in the recent past. But China keeps growing. Japan is another story that defies Western orthodox macroeconomics.
In equity terms, Frexit risk would leave financial entities having to fuel the economy while depositors would sell francs and buy euros. Obviously the loss in the lending margin would be a huge multiple of the fear spread.
In 2016, Spain was once again the European country which received the most funding from the European Investment Bank (EIB), for a total of 11.5 billion euros, in terms of investment per unit of GDP or, in other words, in relation to the size of its economy.
The Spanish banking sector’s stock market rally has been suddenly cut short. The listed banks’ index had risen over 45% since the minimum levels of June 2016 until the first week of January. But since then, it is seeing a correction. Two matters of concern for investors are the impact of the floor clauses ruling on the banks profit and loss account, as well as the problems of the Italian banks.
“What is clear is that Greece cannot pay its debt and will never pay it. There needs to be an acquittance. And European legislation does not allow for waivering of debt. What they are going to do now, and it should have been done seven years ago, is to modify the conditions in such a way that the debt will be practically waivered,” says Spanish economist Fernando Eguidazu, as he leaves his Foreign Office post of Secretary of State for the European Union.
CaraxAlphavalue | We held the view a year ago that 2016 would be difficult. It turned out to be wrong from summer 2016. Still, we repeatedly mentioned that the 2016 earnings delivery would not be as strong as anticipated from a recovery year after a disastrous 2015. Price earnings ratio ambitions started 2016 with a +12% hope. By early 2017, we are down to 7.5% on our coverage (469 stocks with a combined market cap of about €9tn).
The European banking system is much larger than the US’, namely three times –$33.2 trillion against $13.4 trillion. Hung Tran, Executive Managing Director at the Institute of International Finance, explained to The Corner how this could result in the Eurozone becoming one of the world’s lenders.
The Bank of Spain’s (BoS) Financial Stability Report usually puts its finger on the problem when it highlights the main risks affecting the banking business. As well as low interest rates and the deterioriation in both Spanish and global economic prospects, the BoS’ latest report points to another factor which has not warranted so much attention: the decline in the prices of financial assets, both in fixed income securities and equities.
The savings banks which were bailed out by the FROB continue to present problems for that institution and the government. The idea was that after they were restructured and their value had increased, they would find a buyer or incorporate a partner with a controlling stake or seek a stock market listing. So then they would give back at least a good part of the state aid received from the FROB. But these plans are turning out to be difficult to implement.
Jens Bastian via Macropolis | When the largest Greek banks (in terms of assets) published their second quarter results a fortnight ago, much investor attention was focused on the formation and breakdown of non-performing exposure (NPE) on their respective balance sheets. This focus is the result of regulatory authorities and investors wanting to know if the four systemic banks have started to reverse the multi-year trend of continuously rising “red loans” in their portfolios.