EUROPEAN banks are slipping into a terrifying zombie state of decline thanks to the European Central Bank (ECB), a leading investment bank has warned.
Financial firms on the continent are falling victim to a scourge already seen in Japan where firms are considered to be the undead of the world, according to JP Morgan.
Ultra low interest rates inflicted by the ECB have lowered business lending. Continue reading
FEARS of a financial catastrophe in Europe if Britain votes to leave the union, has prompted the bloc’s top policymakers to plot an emergency Brexit plan of action.
A vote to Leave on June 23 could immediately plunge Europe’s stock markets into meltdown amid fears the union is heading for collapse.
In a bid to stop the chaos, the European Central Bank (ECB) has now decided it would publicly pledge to do “whatever it takes” to prop up markets if and when a Brexit is announced, according to reports. Continue reading
Europe’s bank index has posted its longest weekly string of losses since 2008
European banks have been caught in a perfect storm of market turmoil, lately.
“The current environment for European banks is very, very bad. Over a full business cycle, I think it’s very questionable whether banks on average are able to cover their cost of equity. And as a result that makes it an unattractive investment for long-term investors,” warned Peter Garnry, head of equity strategy at Saxo Bank. Continue reading
We recently noted the rise of counterparty risks in the financial system due to oil prices dropping (and leveraged derivative exposures) but as the Russia situation has deteriorated so dramatically this week, a renewed focus on bank exposures has sent stocks reeling (and credit risk soaring) among many European (and US) banks. As Bloomberg reports, Raiffeisen Bank International and Societe Generale, the European banks with most at stake in Russia, led European lenders lower. Continue reading
Council on Foreign Relations compares Germany’s hardline stance with US policy towards Britain at the end of the Second World War
The eurozone debt crisis is deepening and threatens to re-erupt on a larger scale when the liquidity cycle turns, a leading panel of economists warned in a clash of views with German officials in Berlin.
“Debts above 130pc of GDP for Italy and 170pc for Greece are a recipe for disaster once we go into the next downturn,” said Professor Charles Wyplosz, from Geneva University.
“Today’s politicians believe the crisis is over and don’t want to hear any more about it, but they have not tackled the core issues of fiscal union and public debt,” he said, speaking at Euromoney’s annual Germany conference.
“Psssst!” whispers Süddeutsche Zeitung: Want to know the worst-kept secret of the big US and European banks? They’re preparing for the worst: the exit of Greece from the eurozone and even the break-up of the eurozone itself, writes the newspaper. “An army of management consultants and lawyers” have been working for weeks on “the infinite number of things to do” in response to bankruptcy in Athens. Tasks range from how to manage riots in the crisis countries, where the safety of bank employees will be an issue, through to ensuring the stability of the hot lines for advising investors and preparing computer systems to reckon in drachmas.
Full article: Banks are preparing for “Grexit” (Presseurop)
According to the fine print of a treaty signed on February 21, the European Union now has the power to seize Greece’s gold reserves. The modifications the EU is forcing into the Greek constitution vest Greece’s creditors, mainly European banks and the European Central Bank, with the authority to take gold from the Bank of Greece.
“This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders,” said Greek Member of Parliament Louka Katseli, who drew attention to the potential gold seizure.
Full article: Europe to Seize Greece’s Gold (The Trumpet)