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Post by erxtrader on Sept 18, 2011 23:57:40 GMT -5
I think the amount of bearish sentiment alone should make you think maybe the worst was seen. It is typically skepticism that acts as a sign that the market has a lot of room to move up, just as it is complacency that acts as a sign that the market has a lot of room to move down as it did in July/August of this year. I think right now there is way more skepticism than complacency. I agree with most of that. Over a long term, arguably, sentiment is the ONLY indicator of how one should put money into the market. Unfortunately, in the near term of intermediate term, a calamity (e.g., an earthquake that sinks Wall Street) can change everything. Your argument here seems to be that most of the stuff about Greece was known. I partly agree too. For example, the EU has the financial power to save Greece and fix things. People knew that. But one thing was not clear until now: whether EU had the political will to deal with the Greek problem. The assumption was that as much as the EU members hate it, the EU members eventually would do the rational thing. Recent developments are shattering the assumption the EU will do the rational thing. |
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Post by Clinton SPX on Sept 19, 2011 13:50:21 GMT -5
GREEK FIN MINISTRY SAYS TROIKA CONFERENCE CALL OVER, ANNOUNCEMENT EXPECTED SHORTLY - RTRS
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Post by Rich on Sept 19, 2011 13:51:24 GMT -5
that must be why the euro has been taking off the last hour
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Post by Clinton SPX on Sept 19, 2011 13:55:05 GMT -5
gREEK ANNOUNCEMENT " Hey everyone, were still broke" EOM
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Post by Rich on Sept 19, 2011 13:56:58 GMT -5
hehehe
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Post by Clinton SPX on Sept 19, 2011 14:06:49 GMT -5
Greece Announces Troika Call Is Over - Announcement Expected Shortly Submitted by Tyler Durden on 09/19/2011 - 14:48 Greece International Monetary Fund Update: Sigh, looks like just more talk: VENIZELOS, EU, IMF CONFERENCE CALL 'PRODUCTIVE,' MINISTRY SAYS GREECE SAYS CALL WAS `PRODUCTIVE AND SUBSTANTIVE DISCUSSION VENIZELOS, EU, IMF TO HOLD ANOTHER CALL AT SAME TIME ON SEPT 20 GREECE SAYS CALL WILL BE REPEATED AT THE SAME TIME TOMORROW GREECE SAYS EXPERTS TEAM TO ELABORATE FURTHER ON DATA TOMORROW  |
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Post by Clinton SPX on Sept 19, 2011 15:46:21 GMT -5
The Corporate Bank Run Has Started: Siemens Pulls €500 Million From A French Bank, Redeposits Direct With ECB
Submitted by Tyler Durden on 09/19/2011 15:43 -0400
Bank Run European Central Bank Eurozone Federal Deposit Insurance Corporation Germany Goldman Sachs goldman sachs Greece Risk Management SocGen
In a shocking representation of just how bad things are in Europe, the FT reports that major European industrial concern Siemens, pulled €500 million form a large French bank, which is not BNP and leaves just [SocGen|Credit Agricole] and deposited the money straight to the ECB. The implications of this are quite stunning, as it means that even European companies now refuse to work directly with their own banks, and somehow the ECB has become a direct lender/cash holder of only resort to private non-financial institutions!
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Post by Clinton SPX on Sept 19, 2011 16:38:16 GMT -5
(Reuters) - International lenders told Greece on Monday it must shrink its public sector and improve tax collection to avoid running out of money within weeks as investors spooked by political setbacks in Europe dumped risky euro zone assets.
Greece is near an agreement to continue receiving bailout funds, a Greek finance ministry official said after a conference call with lenders, though "some work still needs to be done."
U.S. stocks staged a late comeback on the news of the possible deal.
Finance Minister Evangelos Venizelos held what Greece termed "productive and substantive" talks by telephone with senior officials of the European Union and International Monetary Fund after promising as much austerity as necessary to win a vital next installment of aid.
Before the talks, which will resume on Tuesday evening after meetings of experts through the day, the IMF representative in Greece spelled out steps Athens must take to secure the 8 billion euro loan payment it needs to pay salaries and pensions next month.
"The ball is in the Greek court. Implementation is of the essence," Bob Traa told an economic conference.
Additional savings measures were required to cut the public deficit to a sustainable level and reduce the public sector's claim on resources -- code for axing jobs and cutting pay and pensions -- while improving tax collection rather than adding further taxes, Traa said.
Venizelos said the country would do what was necessary to get more rescue funds, but would not allow itself to be made a scapegoat by euro zone policymakers who had failed to deal with the region's debt woes.
European stocks and the euro fell sharply on fears of a Greek default, compounded by the failure of EU finance ministers to agree new steps to resolve Europe's debt crisis at weekend talks, and another regional election defeat for German Chancellor Angela Merkel.
In a sign of mounting stress, yields on Italian and Spanish bonds rose further above 5 percent despite six weeks of European Central Bank buying in an effort to stabilize them. The cost of insuring peripheral debt against default also rose.
"There will be additional volatility in the global financial markets heading into the end of the month as the pressure to get Greece and others to enact their reforms will be white-hot intense," said Andrew Busch, global currency strategist at BMO Capital Markets in Chicago.
The euro zone debt crisis is now dominating the thoughts of policymakers worldwide with the United States, in particular, pushing for more dramatic action from Europe's leaders.
"A new and larger risk looms. The drop in markets and confidence could prompt slippage in developing countries' investment and a pull back by their consumers too," World Bank chief Robert Zoellick said ahead of G20 talks and an IMF/World Bank meeting in Washington later in the week.
Without its next loan tranche, Athens says it will run out of cash in mid-October, leaving it unable to cover state salaries and pensions and pay its bills.
A default would pose the risk of contagion to larger euro zone economies such as Italy and hammer European banks with heavy exposure to Greece.
The finance ministry said no cabinet meeting was scheduled after the telephone call with international lenders or on Tuesday.
Prime Minister George Papandreou canceled a planned trip to Washington and the United Nations at the last minute and returned home in response to the crisis.
A senior Greek government official told Reuters the EU/IMF inspectors expect a new property tax unveiled last week to yield just half the two billion euros targeted this year.
Greek media published a list of 15 austerity measures it said the troika was demanding the Socialist government implement to receive the next tranche of aid.
They included firing another 20,000 state workers, cutting or freezing state salaries and pensions, increasing heating oil tax, shutting down loss-making state organizations, cutting health spending and speeding up privatizations.
The European Commission said it was not asking Athens to adopt any additional austerity steps on top of what had already been agreed in the Greek reform program.
"What is on the table is full compliance with the agreed targets," Commission spokesman Amadeu Altafaj said in Brussels.
PUBLIC SUPPORT LACKING
The IMF's Traa acknowledged that the IMF/EU bailout program lacked public support and said there was plenty of goodwill to give Greece more time for its adjustment program in a weaker than expected economy.
He said the economy was set to contract by 5.5 percent this year and 2.5 percent in 2012.
Asked whether Greece would get the next loan tranche, finance minister Venizelos told Reuters: "Yes, of course."
Even if it does, many economists and investors believe Athens will have to default on its debt mountain -- more than 150 percent of gross national product -- perhaps within months.
Former IMF managing-director Dominique Strauss-Kahn joined this chorus on Sunday, saying in a French TV interview that Greece's debt must be reduced, and government and private creditors should take losses now rather than playing for time.
"(EU) governments are not solving things, they are kicking the problem down the road, and the snowball is growing and making the problem bigger and bigger," he told TF1 television.
Uncertainty over Greece was compounded by another political shock in Germany at the weekend.
The sixth regional election defeat this year for Merkel's center-right coalition on Sunday raised questions about the stability of her government and her ability to push through more euro zone rescue measures.
Her Free Democratic (FDP) junior coalition partners crashed out of the Berlin regional assembly with just 1.8 percent of the vote, raising pressure from some party activists to take a more Euroskeptical line.
The Berlin regional vote appeared to leave the cautious Merkel with less room for maneuver to take bold action in defense of the euro.
Leaders of both the Bavarian Christian Social Union (CSU) and the FDP have raised the prospect of Greece defaulting and possibly having to leave the 17-nation single currency area, ignoring rebukes from the chancellor for alarming markets.
Merkel said on Monday it would send a disastrous political message if euro zone members could be thrown out of the bloc because they faced difficulties. Instead, she advocated tougher rules to force euro states to obey budget discipline.
German lawmakers are due to vote on September 29 on reforms agreed by euro zone leaders in July to allow the European Financial Stability Facility to buy government bonds in the secondary market, give states precautionary loans and lend to recapitalize banks.
Merkel insisted she would win the vote. "We intend to pass it of course with our own parliamentary majority ... I am confident this will be the case," she said.
In another illustration of the pressures on her, German central bank chief Jens Weidmann told parliament that planned measures to beef up the euro zone's rescue fund would not encourage countries to put their budgets in order.
Treasury Secretary Timothy Geithner pressed euro zone finance ministers apparently in vain at a meeting in Wroclaw, Poland, to take stronger action to stop the sovereign debt crisis spreading.
One of his predecessors, Lawrence Summers, said in a Reuters column that all nations should pressure Europe to go beyond "grudging incrementalism" to recapitalize banks, and revive economic growth.
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Post by erxtrader on Sept 19, 2011 17:46:11 GMT -5
This has to be THE most depressing thread in any financial site. Including FAZtopia in yahoo.  Just kidding. |
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Post by maxi on Sept 19, 2011 17:47:42 GMT -5
This has to be THE most depressing thread in any financial site. Including FAZtopia in yahoo. Just kidding. No not kidding! I totally agree with you. Last night i could not even stand to read it! |
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Post by erxtrader on Sept 19, 2011 17:50:16 GMT -5
max, I just had to exaclt you.
Not that you need to be exalted, given how many karma points you have ...
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Post by Clinton SPX on Sept 19, 2011 20:06:38 GMT -5
This sounds a lot like our country two years ago.
The delinquency rate of the Spanish financial system credit (banks, cooperatives and credit institutions) rose in July to 6.936% against 6.690% in June, according to data released today by the Bank of Spain.
The delinquency rate remains at its highest level in 16 years, since February 1995. When compared with July 2010, the data show a significant increase in bad debts, because in that month was in the 5.483%.
Of the total of 1.79 billion in loans, doubtful loans are 124.618 million, compared with 100.527 million from the same month last year.
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Post by Clinton SPX on Sept 19, 2011 21:38:19 GMT -5
Inflation in the UK now stands at 4.5% on the Consumer Price Index measure, and 5.2% on the Retail Price Index
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Post by Clinton SPX on Sept 19, 2011 22:43:57 GMT -5
China Pulls The Rug From Under Europe, Halts French Bank Transactions, Makes Good On Trade War Ultimatum
Submitted by Tyler Durden on 09/19/2011 23:20 -0400
China headlines Newspaper Reuters Sovereign Debt Trade War Volatility
A flurry of headlines out of China suggest global macro-economic volatility may be ready to take it to the next level. We discussed last week how China's oh-so-generous offer of help to Europe was merely a veiled threat playing US against Europe in a game of who-gets-the-funding. Well, tonight, it seems, they are making good on some of those threats. Aggravated by EU's lack of market economy recognition, they pull trading lines with French banks, express concern at the EUR's safety (preferring US Treasuries), and indicate a clear preference for bonds over stocks - all the while warning of growing trade tensions - consider the sabre-rattled.
Initial comments from Commerce Minister Shen via Bloomberg:
*CHINA DISAPPOINTED EU HASN'T RECOGNIZED MARKET ECONOMY STATUS
*CHINA MARKET ECONOMY STATUS IS POLITICAL DECISION, SHEN SAYS
*CHINA MARKET ECONOMY STATUS NOT TECHNICAL ISSUE, SHEN SAYS
*CHINA'S HELP TO EUROPE, MARKET STATUS HAVE NO DIRECT CONNECTION
was quickly followed by the 'threat/promise':
*MOFCOM'S SHEN: EU DEBT CRISIS MAY RAISE CHINA TRADE FRICTION
*CHINA MOFCOM IS CONDUCTING REVIEW OF NESTLE-HSU FU CHI DEAL
and then Reuters reports:
A big market-making state bank in China's onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday.
The European banks include French lenders Societe Generale , Credit Agricole and BNP Paribas.
"Apart from spot trading, all swaps and forwards trading (with the European banks) have been stopped," one source who is familiar with the matter told Reuters.
And the piece-de-resistance of the night was, again from Reuters:
China, the largest foreign holder of U.S. government debt, will keep buying U.S. Treasuries, the official People's Daily, the ruling Communist Party's mouthpiece reported on Tuesday, citing government researchers.
In an article about the reasons for China's increased purchase of U.S. Treasuries, the newspaper cited Yan Xiaona, a researcher with the Chinese Academy of Social Sciences, as saying that the dollar "is relatively safer than the euro" because of the unfolding sovereign debt crisis in Europe.
Furthermore, as if he had just read our earlier debt vs equity post:
Wang Chaocai, a Ministry of Finance researcher, was quoted as saying that "what else we can buy if not U.S. Treasuries? It's more risky to buy into equities."
Lastly, for feces and giggles, China Daily just had to throw in the military element with the tongue in cheeky "Backlash expected if US seals arms deal"...
It seems that China did not get the answer they wanted from the Europeans and just as we said last week, swung back in favor of the US - TSYs as opposed to stocks. China 3 - Europe 0 - US 1 is the approximate score in this first round perhaps.
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Post by erxtrader on Sept 20, 2011 6:13:32 GMT -5
Clinton, I think you are enjoying posting all these bearish stuff.
Being evil is fun.
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Post by tarzan on Sept 20, 2011 6:43:32 GMT -5
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Post by Clinton SPX on Sept 20, 2011 7:21:29 GMT -5
Clinton, I think you are enjoying posting all these bearish stuff. Being evil is fun. I really couldnt find ANYTHING bullish to post |
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Post by Clinton SPX on Sept 20, 2011 7:22:33 GMT -5
heres finally some bullish EU news
Siemens's banking business said a newspaper report that the unit withdrew deposits from a large French bank and transferred them to the European Central Bank was factually incorrect.
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Post by Clinton SPX on Sept 20, 2011 7:26:59 GMT -5
The boost in European markets come from "much better than expected" bond auction results in Greece and Spain which are "helping to bolster sentiment," said Joel Kruger, technical currency strategist at FXCM
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Post by Clinton SPX on Sept 20, 2011 17:46:51 GMT -5
ZH - After Greece realized that it is not America, which can pretend it will do an infinite does of austerity... just not today... and not tomorrow...and really everything will be back-end loaded to some point 9 year from now (when it is some "other administration's problem") and the IMF made it clear that cuts have to happen immediately if not sooner, the country has released a statement that in exchange for getting the latest round of Troika funding (which it needs desperately: recall that it has another €2 billion debt paydown this Friday), it will front-load some of those mythical austerity measures that otherwise would have never really occurred. Which means that strikes (most notably by the tax collectors), riots and all around fun is about to become the prime time TV highlight from Syntagma square all over again, as tens of thousands of more government workers are fired or furloughed, or just generally lose their pension benefits, courtesy of living in an insolvent country. In the meantime, the European banks can pretend the contagion from a Greek fall out will be contained and the Fed's infinite swap lines will mask any and all completely unexpected black swans. Best of luck with that.
From Reuters:
Greece has agreed to front-load austerity measures and is close to securing a deal with its international lenders, a Finance Ministry official said on Tuesday.
"I feel confident that the next tranche will be disbursed. We are close to clinching a deal with the troika," the official told Reuters, speaking on condition of anonymity.
And in other news, while the IMF did succeed to call Greece's bluff, it still hasn't shown its hand. And it won't, but not until October as was reported earlier, but next week. Which means this week's next bond payment will once again put the market on edge.
The mission of top inspectors from Greece's international lenders will return to Athens early next week to resume its review of the country's progress in a 110 billion euro ($150 billion) bailout programme, a source close to the team said on Tuesday.
The representatives from the European Union, International Monetary Fund and European Central Bank had earlier held a conference call with Greece's finance minister on steps Greece must take to receive an 8 billion euro aid tranche it needs to avoid running out of cash next month.
The source close to the so-called troika said good progress was made during the call and technical discussions would continue in Athens in the coming days.
In other words: nothing is settled, daily headline risk remains, except that the Greek government should immediately start charging royalty payments for RiotVisionTM, which in this next coming iteration should be quite a spectacle.
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Post by rex on Sept 20, 2011 17:57:48 GMT -5
Those riots in other countries really are very entertaining to watch. As a matter of fact, I miss them. I want more.....they are better than any reality show on TV today.
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Post by tendermyshares on Sept 20, 2011 18:17:49 GMT -5
What does it mean for something to be "factually incorrect" these days, any ideas?! heres finally some bullish EU news Siemens's banking business said a newspaper report that the unit withdrew deposits from a large French bank and transferred them to the European Central Bank was factually incorrect. |
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Post by Clinton SPX on Sept 22, 2011 0:08:04 GMT -5
France back to sucking Attachments:
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Post by erxtrader on Sept 22, 2011 6:45:15 GMT -5
(1) The EU members need to backstop their banks.
(2) The EU members need to pay Greece until they can get their banks in order.
(3) Then, let Greece default
I wonder how long it will take them to realize this. Merkel doesn't have the political clout needed to push Germany to help Greece - she should cut her losses and opt to bolster Germany's banks. Sarcozy should follow suit.
This is ridiculous.
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Post by Clinton SPX on Sept 22, 2011 21:18:14 GMT -5
DJ French Fin Min: Euro Zone To Do Whatever It Takes To Maintain Stability
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Post by Clinton SPX on Sept 22, 2011 22:21:12 GMT -5
BNP Paribas Joins SocGen to Beat Retreat as European Debt Crisis Deepens
Q
By Fabio Benedetti-Valentini - Sep 22, 2011 6:01 PM ET
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Societe Generale Chief Executive Officer Frederic Oudea. Photographer: Antoine Antoniol/Bloomberg
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Sept. 13 (Bloomberg) -- Frederic Oudea, chief executive officer of Societe Generale SA, talks about the outlook for the bank and Europe's debt crisis. Societe Generale plans to free up 4 billion euros ($5.4 billion) in capital through disposals by 2013 to reassure investors about its finances. The lender’s exposure to Greek bonds is about 900 million euros and it has “no significant” holdings of Irish or Portuguese debt, the Paris-based bank said yesterday in a statement. Oudea speaks with Erik Schatzker and Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
BNP Paribas (BNP) SA and Societe Generale SA, France’s two largest banks, are trimming about 300 billion euros ($405 billion) off their balance sheets as Europe’s deepening debt crisis threatens to make them too big to save.
At the end of March, French financial firms had $672 billion in public and private debt in Greece, Portugal, Ireland, Italy and Spain, according to Basel, Switzerland-based Bank for International Settlements. That’s the biggest exposure to the euro-area’s troubled countries and almost a third more than German lenders. The four largest French banks have 5.9 trillion euros in total assets, including loans and bond holdings, or about three times France’s gross domestic product.
“The banks are entering a slimming cure, which is forced by the sovereign crisis,” said Jerome Forneris, who helps manage $10 billion, including the two French lenders, at Banque Martin Maurel in Marseille, France.
Rather than tap the market for capital, BNP Paribas and Societe Generale (GLE) are seeking to free up a combined 10 billion euros through asset cuts and disposals. Paris-based BNP Paribas plans to cut $82 billion of corporate- and investment-banking assets, while Societe Generale may exit businesses such as aircraft and real-estate finance in the U.S.
The banks have been forced to act after concerns about their sovereign debt holdings made funds reluctant to lend to them, crimping liquidity options. At the end of 2010, France’s three largest banks had at least 500 billion euros of short-term and interbank funding rolling over within three months or less, according to a Barclays Capital note dated Sept. 7.
‘Problematic’ Rescue
“If liquidity conditions worsen, their size and the weight of their trading books would make it more problematic for the government to replicate a rescue like in 2008,” said Christophe Nijdam, an analyst at AlphaValue in Paris.
France provided about 20 billion euros to bolster capital levels at its largest banks after Lehman Brothers Holdings Inc.’s September 2008 bankruptcy. President Nicolas Sarkozy also set up a 320 billion-euro fund to guarantee bank debt.
“If guarantees had to be put in place again like in 2008, it would represent close to 20 percent of GDP,” Nijdam said. With French public debt set to rise to almost 90 percent of GDP in 2012, it would “be more problematic today,” he said.
Credit markets signal a squeeze at French banks, with increased risk of default. Credit-default swaps on BNP Paribas have almost tripled to 292 basis points from 110 in July, according to CMA. Contracts on Credit Agricole SA (ACA) have climbed to 297 from 130, while those for Societe Generale have surged to 399 from 128.
‘Drastic and Disorderly’
“If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion,” Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., wrote in an opinion piece on the website of the Financial Times yesterday.
The effort to shrink operations reverses French banks’ buying binge and expansion in the last decade. French lenders spent about $173 billion on acquisitions since 2000, according to Bloomberg data. Outside of France, they invested in Italy, Belgium, Germany and the U.S.
“When the euro was established, there were spots to be among the big regional banking players,” said Francois Chaulet, who helps manage 250 million euros at Montsegur Finance in Paris. “A race for size started not just in France, but throughout Europe. French banks went into southern Europe because these banking markets were still fragmented, with retail-banking margins higher than in northern Europe.”
Tumbling Shares
That expansion has now come back to haunt French banks. Their exposure to Europe’s problem areas and a tightening in U.S. dollar funding are weighing on their shares.
Societe Generale has declined by 63 percent since the start of July, making it the worst performer in the 46-member Bloomberg Europe Banks and Financial Services Index. BNP Paribas fell 57 percent in the period, the third-worst performance, while Credit Agricole dropped 59 percent, the second-worst performance.
Moody’s Investors Service lowered the credit ratings of Societe Generale and Credit Agricole last week and said it may downgrade BNP Paribas.
French financial firms top the list of Greek creditors with about $57 billion in overall exposure to private and public debt at the end of March, according to the BIS.
In Italy, whose sovereign rating was cut by Standard & Poor’s this week, French financial firms at the end of March carried $410 billion in government and private debt, according to BIS data. That’s the most for financial firms from any foreign country.
Buying Binge
French lenders’ debt holdings in Spain stand at $146 billion, in Ireland $30 billion and in Portugal $28 billion.
Credit Agricole spent about 2.2 billion euros in 2006 to amass a controlling stake in Emporiki Bank of Greece SA and then increased its holding over time. Societe Generale has a controlling stake in unprofitable Athens-based Geniki Bank SA. BNP Paribas, which has exposure to Greek sovereign debt, doesn’t have a branch network in the country.
In Italy, French financial companies spent at least 20 billion euros since 2006 to buy banking and insurance assets in the euro-area’s third-largest economy.
BNP Paribas and Credit Agricole bought two of Italy’s 10 largest lenders. BNP Paribas acquired Rome-based Banca Nazionale del Lavoro SpA in 2006 for 9 billion euros. Credit Agricole’s Cariparma unit in Italy operates about 960 branches.
‘Not an Issue’
The three biggest French banks say their exposures are manageable, rejecting suggestions that they need to recapitalize.
“Our situation is under control in terms of liquidity and shareholders’ equity,” BNP Paribas Chief Executive Officer Baudouin Prot said in a French radio interview yesterday. Injection of capital by the state “is neither part of our working hypothesis nor what we want,” he said.
Greece “is not an issue” for Societe Generale, CEO Frederic Oudea said Sept. 12. A hypothetical writedown of as much as 50 percent would result in net losses of between 100 million euros and 150 million euros, he said. The bank said it has “low, declining and manageable sovereign exposure” of 4.3 billion euros to Italy, Spain, Portugal, Ireland and Greece.
The European debt crisis has generated as much as 300 billion euros in credit risk for European banks, the International Monetary Fund said this week, calling for capital injections to reassure investors and support lending.
Capital Buffers
“Without additional capital buffers, problems in accessing funding are likely to create deleveraging pressures at banks, which will force them to cut credit to the real economy,” the IMF said.
French banks have so far rejected such calls.
“French banks have no capital problem,” said Oudea, who is currently the head of the French Banking Federation.
Not all investors and analysts are convinced.
“These banks operate in countries where the public debt is under attack,” said Montsegur’s Chaulet. “That’s the threat.”
Faced with the specter of a Greek debt default, U.S. money- market investors have curbed funding to European banks. At the end of July, the 10 largest U.S. money funds eligible to purchase corporate debt, had cut their exposure to European banks by 20 percent from May 31, according to Fitch Ratings.
Scared Markets
“When the market gets scared, you have this short-dated paper that matures and it is not renewed,” AlphaValue’s Nijdam said. “Because it is in big chunks, the liquidity squeeze can go much faster than, let’s say, a traditional bank run from retail customers.”
French banks say they can cope with the slump in U.S. money-market funding. On Sept. 15, the European Central Bank said it will ensure euro-area lenders access to dollars in coordination with the Federal Reserve.
French banks also have diversified sources of profit, including less cyclical businesses such as insurance, that allowed them to weather the 2008-2009 crisis, said Montsegur’s Chaulet. The lenders’ domestic retail business -- their mainstay -- remains strong, Oudea said this month.
“The banks don’t want to recapitalize and focus on highly profitable businesses or on their domestic retail markets,” said Martin Maurel’s Forneris. “If the sovereign debt crisis is solved, these stocks have a huge potential of rebound over the medium term.”
Underestimated Crisis
For now, the scarcity of short-term U.S dollar funding and sovereign debt crisis that is both deepening and widening is driving banks’ efforts to slim down.
Societe Generale said it plans to free up 4 billion euros in capital through disposals by 2013. Its disposals may come from its Global Investment Management and Services division, Oudea has said, without giving further details. Analysts estimate the bank is shrinking its balance sheet by about 100 billion euros, a number the bank declined to confirm or deny.
BNP plans to cut its total assets by 10 percent, or about 200 billion euros. It’s shrinking its corporate- and-investment banking unit, where there will be “significant” job reductions, Prot said yesterday. On Sept. 19, the bank said it will discontinue its “pure retail” banking activity in Russia, where it operates 26 branches.
BNP Paribas is shrinking its balance sheet after total assets rose 34 percent to 2.24 trillion euros in the three years through June 2010. Total assets were at 1.93 trillion euros in June, about the same size as France’s GDP.
“It’s a step in the right direction, but maybe it won’t be enough,” said AlphaValue’s Nijdam. “To cut the balance sheet, it’s quicker to adjust through the trading books. BNP and SocGen lack the ambition to reduce the size of trading books.”
The banks are also late in taking such steps, said Lutz Roehmeyer, who helps manage about $14 billion at Landesbank Berlin Investment GmbH and holds shares in the two banks.
“They underestimated how big the crisis could get in Europe,” Roehmeyer said. “But this is not a new crisis, it’s just the aftermath of the 2008 banking crisis.”
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Post by Clinton SPX on Sept 24, 2011 12:33:25 GMT -5
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Post by Clinton SPX on Sept 24, 2011 12:35:27 GMT -5
German and French authorities have begun work on a three-pronged strategy behind the scenes amid escalating fears that the eurozone’s sovereign debt crisis is spiralling out of control. Their aim is to build a “firebreak” around Greece, Portugal and Ireland to prevent the crisis spreading to Italy and Spain, countries considered “too big to bail”. According to sources, progress has been made at the G20 meeting in Washington, where global leaders piled pressure on the eurozone to fix its problems before plunging the world back into recession. In a G20 communique issued on Friday, the world’s leading economies set themselves a six-week deadline to resolve the crisis – to unveil a solution by the G20 summit in Cannes on November 4. Sources said the plan would have to be released as a whole, as the elements would not work in isolation. First, Europe’s banks would have to be recapitalised with many tens of billions of euros to reassure markets that a Greek or Portuguese default would not precipitate a systemic financial crisis. The recapitalisation plan would go much further than the €2.5bn (£2.2bn) required by regulators following the European bank stress tests in July and crucially would include the under-pressure French lenders. Attachments:
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Post by Clinton SPX on Sept 24, 2011 12:36:57 GMT -5
EU banks rallied 5% FRIDAY
Im sure insiders got a heads up
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Post by rex on Sept 24, 2011 14:30:06 GMT -5
Just like I thought, another bandaid and back up to 1200 we go next week!!! Then, that bandaid will fizzel out and back down to 1100 we'll go.
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