Archive for the ‘Europe’ Category
Signs of trouble in the western economies remain for banks
Whether its Greece, Portugal and the EU financial issues, or the ongoing housing saga in the US, we are clearly not yet out of the woods relative to the 2008 banking crisis.
U.S. Plans to Expand Aid to Troubled Homeowners | NYT
The Obama administration will announce on Friday a broad new initiative to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.
Nicolas Sarkozy opening plenary | Davos WEF Annual meeting 2010
I finally got around to watching the full Sarkozy opening to WEF. It is both controversial and interesting. He continues the theme that ‘anglo saxon’ financial models are the problem and makes some good points that are hard to disregard. For example, he notes that it was too easy to earn large amounts of money based on ‘today’ with no regard for future implications, and with little effort.
Worth watching. There are more ways to see the world that the North American way.
Eurozone banks face $283bn writedowns| Report
Europe and the ECB are slow with dissemination of analysis and information when compared to the IMF, US and UK. But when they do, here is 226 pages of analysis that tells us Euro Banks will write off $283 Bn over 2009/ 2010.
More to come after I get a chance to digest, but meantime here it is for your reading pleasure. They key is the general deterioration and reduction in forecasts since last in December 2008.
ECB Financial Stability Review pdf
The further significant deterioration of global macroeconomic conditions since the finalisation of the December 2008 Financial Stability Review as well as sizeable downward revisions to growth forecasts and expectations have added to the stresses on global and euro area financial systems. The contraction of economic activity and the diminished growth prospects have resulted in a further erosion of the market values of a broad range of assets.
Connected with this, there has been a signifi cant increase in the range of estimates of potential future write-downs and losses that banks will have to absorb before the credit cycle reaches a trough. Although there are great uncertainties surrounding such estimates of probable losses and of the outlook for banking sector profi tability, the scale of estimates of potential write-downs has weighed on investors’ confidence in the resilience of already-weakened financial institutions. Refl ecting the challenges confronting the euro area banking sector, funding costs have remained elevated, the market price of insuring against bank credit risk has continued to be very high and the market value of many banks’ equity has remained significantly below book value.
Eurozone banks face $283bn writedowns | FT
Eurozone banks face additional losses of more than $283bn this year and next as continental Europe’s severe recession intensifies strains on its financial sector, the European Central Bank has warned.
The fates of the eurozone economy and its banks have become increasingly interlinked, the ECB reported on Monday in its latest “financial stability review” with banks losses expected to be focused on their loan exposures. Risks to the stability of the financial sector remained high, it said, while “uncertainty prevails” over the shock-absorbing capacity of the banking system.
How much of this is a US bailout for a European problem?
Sometimes you have to read something twice because you thought it was a mistake. I had that moment in an article in the paper version of the Financial Times this morning. It lists European Banks, and shows the percentage their assets are of their country’s GDP. Here is a synopsis, with just those that are close or exceed their country’s GDP.
For fun I added the North American view, and even more fun I added Microsoft, one of the largest companies in North America. It shows that the relative size of Banks to the European economies is a significant proportion, whereas in North America not so much. It also suggests to me at least, that the US bailout package needs to be clear on whom it is bailing out. The European Banks were happy to pick up the securitised mortgages from US Banks, and are now sufferring the consequences.
| Country | Bank | Total Assets to GDP % |
| Iceland | Kaupthing | 623% |
| Landsbanki | 374% | |
| Ireland | Bank of Ireland | 102% |
| Allied Irish | 99% | |
| France | BNP Paribas | 104% |
| Spain | Santander | 132% |
| UK | RBS | 126% |
| HSBC | 98% | |
| Barclays | 94% | |
| Lloyds/ HBOS (est) | 78% | |
| Belgium | Fortis | 254% |
| Dexia | 173% | |
| KBC | 102% | |
| Netherlands | ING | 289% |
| Rabobank | 121% | |
| Germany | Deutsche Bank | 86% |
| Austria | Erste Bank | 85% |
| Italy | Unicredit | 80% |
| Cyprus | Bank of Cyprus | 253% |
| Switzerland | UBS | 484% |
| Credit Suisse | 290% | |
| My additions – North America | ||
| Canada | BMO | 31% |
| RBC | 53% | |
| TD | 42% | |
| Scotia | 39% | |
| US | BofA | 13% |
| JP Morgan | 14% | |
| Citi | 16% | |
| Microsoft | 0.3% |
The matter of funding and capital base of Banks’ is the topic of the day. This relative to loan quality and liquidity is what will ensure that Bank will make it through the crisis or not. It is interesting that the above list are all familiar names during the crisis over the last few months.
In particular, Iceland, Switzerland, Ireland and Belgium having high percentages, on much smaller economies are worrisome.
Moneysupermarket hit as Barclays closes loans unit
An interesting side effect of the economic situation, and the credit crisis. Moneysupermarket are estimate to lose $7 million in referral revenue as a result of Barclays cancelling their secured loan service.
FT.com / Companies / Financial services – Moneysupermarket hit as Barclays closes loans unit
The group said First Plus was the largest provider of secured loans in the market, and its withdrawal would cost it £7m in revenues in the remainder of this year. Analysts at Numis had previously expected revenues of £186m this year.
Summary of p2p lending market in Poland | Cap Gemini & Gemius
Report with rich data on the Polish p2p market. Data is qualitative comparing typical internet population, and p2p population. In general it appears that p2p lending in Poland is skewed towards to the average internet population. Having said that, the distrust level of Banks in Poland is higher than in the west, so the outcomes are not directly comparable.
Well worth the read.
Internetowe pożyczki społeczne :: Gemius SA
Raport w języku angielskim [note: link to English pdf]
EU to break down e-commerce borders
In a reversal of usual government tendencies, the EU is planning to force companies to take a global perspective within the EU borders.
Finextra: EU to break down e-commerce borders
In a speech given in London, Kuneva said she will propose new legislation this autumn for creating an EU-wide set of rules governing online and in-store transactions. The “single, simple set of core rights and obligations” will make it easier to buy and sell across borders and bring down costs for shoppers.
…..… will crack down on e-commerce companies that conduct business across member states but force customers to make purchases on country-specific Web sites.
xxx
China and Japan spending time to improve relations
Interesting goings on in Tokyo this week. I know people in Roppongi, and the traffic is completely snarled by the effect of this visit which is for several days it turns out. Locally it is out of the ordinary.
Its a dramatic shift from the days of Mr Koizumi, and has consequences for international trade and banking given the combined size of these two economies relative to US or Eurozone.
FT.com / Asia-Pacific / China – Japan and China cement relations
The leaders of Japan and China agreed on Wednesday on measures, including annual summit meetings and stepped-up civil and military exchanges, to cement a recent improvement of relations after talks in Tokyo that Japanese officials described as “extremely productive and meaningful”.
Hu Jintao, China’s president, the first head of state to visit Japan in a decade and only the second ever, said: “Prime Minister (Yasuo) Fukuda and I believe that Sino-Japanese relations are at a new historic starting point.”
Mapping the credit crunch |Financial Times
Nice interactive map showing the worldwide impacts.
FT.com / In depth – Mapping the credit crunch
The FT’s exclusive interactive map charts how and when many of the financial groups affected by the crisis in the US subprime mortgage markets and the consequent turmoil in credit markets worldwide either made a killing or lost their shirts.
China could buy stake in Barclays | BBC
Interesting twist in the ongoing Barclays/ ABN/ RBS saga. This twist has a distinctly global perspective.
BBC NEWS | Business | China could buy stake in Barclays
Barclays is close to raising around £10bn from the Chinese and Singaporean governments to help finance its takeover of the Dutch bank giant, ABN.
If it succeeds and if Barclays acquires ABN, the Chinese state would emerge with a shareholding of around 7% in the enlarged group.
