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Gene Ellis

European Banks Unprepared for Pandora's Box of Greek Exit (Bloomberg) - 0 views

www.italpreziosi.it/...as-box-of-greek-exit-bloomberg

shared by Gene Ellis on 09 Jul 12 - No Cached
  • Lenders in Germany, France and the U.K. had $1.19 trillion of claims on those four nations at the end of 2011, Bank for International Settlements data show.
  • Lenders in Germany and France saw an increase in deposits of 217.4 billion euros, or 6.3 percent, in the same period.
  • To prevent contagion, countries in the euro area would have to form a full-fledged political and fiscal union immediately and implement uniform guarantees on bank deposits throughout the region, Thomas Wacker and Juerg de Spindler, economists at Zurich-based UBS, said in a separate note. They said such a response can be ruled out.
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  • Bank of France Governor Christian Noyer told journalists in Paris last week that “whatever happens in Greece” won’t place any French financial institution in difficulty.
  • What’s changed is that banks in the so-called core EU countries of Germany, France and the U.K. used funds from the ECB in December and February to insulate their southern European units against losses should one or more country exit the euro. “If you’re a U.K. lender and you’ve lent 10 billion euros to your Spanish subsidiary and Spain exits, you’re suddenly only going to get paid back in 50 percent devalued pesetas and you’re on the hook for 5 billion euros,” said Philippe Bodereau, London-based head of European credit research at Pacific Investment Management Co., the world’s largest bond investor.
  • One way multinational banking groups are mitigating that risk is by replacing their own funding lines to subsidiaries in the region with ECB loans. Deutsche Bank, Europe’s biggest bank by assets, tapped “a small amount” of ECB cash to help fund corporate and retail business in continental Europe, where it has sizeable operations in Italy and Spain. BNP Paribas, Europe’s third-biggest bank, used the programs to help fund its Italian unit as it reduces intergroup backing.
  • European banks also have cut their sovereign-debt holdings and exposures to Ireland, Italy, Spain and Portugal.
  • ermany, France and the U.K. reduced exposure to Greece by more than half in the two years through the end of 2011 to $68.2 billion, BIS data show.
Gene Ellis

Central banks prepare for turmoil after Greek vote | Reuters - 0 views

www.reuters.com/...e-crisis-idUSBRE85D0CA20120616

central banks turmoil greek vote reuters

shared by Gene Ellis on 16 Jun 12 - No Cached
  • ECB President Mario Draghi, one of many policymakers gearing up for trouble after Sunday's vote in Greece, said his bank was ready to step in and fund any viable euro zone bank that gets in trouble.
  • At best, we are going to have a situation that is extremely serious on Monday," Swedish Finance Minister Anders Borg told journalists. "In all likelihood, whatever the outcome, we are going to have a government which is going to find it hard to live up to the agreements they (the Greeks) have signed up to."
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