THE Eurozone Economics Thread pt 1 (merged) Archived

[eXpat]

Yesterday bankruns in Greece, today in Spain!!!
Bankia customers pull out over 1-billion euros

Customers of troubled Spanish bank Bankia, nationalized last week, have taken out over 1 billion euros ($1.3 billion) from their accounts over the past week, El Mundo newspaper reported on Thursday.
The newly appointed chairman, Jose Ignacio Goirigolzarri, informed a board meeting that customers had pulled out funds since the bank was taken over by the government, El Mundo said, citing information from the board meeting it had seen.

The government took over Bankia, the country's fourth largest lender, on May 9 in an attempt to dispel concerns over the bank's ability to deal with losses related to a 2008 property crash.

Uncertainty over the final cost of Spain's banking reform has stoked investor fears that an expensive international bail-out could be on the cards, putting the survival of the euro zone at stake.

Shares in Bankia slumped 10 percent on Wednesday, compounding a week of falls, as small investors who had participated in a July stock market listing sold their holdings which have lost over half their value since the flotation.

http://www.businesslive.co.za/world/int_companies/2012/05/17/bankia-customers-pull-out-over-1-billion-euros

[eXpat]

Contagion, contagion:
Spain falls into recession amid fears of eurozone bank run

MADRID – Spain tumbled into recession and European stock markets and the euro fell Thursday as Greece installed a crisis government to tackle its crippling debt, EU leaders prepared for talks and analysts raised the spectre of a run on eurozone banks.

“Markets are worried about eurozone bank deposit runs and an escalating banking crisis,” London-based VTB Capital economist Neil MacKinnon told Agence France-Presse.

Heavy withdrawals of deposits have been reported in Greece and Spain, and top European Union leaders were to hold a videoconference later in the day.

They were initially to discuss an upcoming G8 meeting of industrialised countries but were now faced with a serious deterioration of the situations in Greece and elsewhere across the eurozone.

http://business.inquirer.net/60015/spain-falls-into-recession-amid-fears-of-eurozone-bank-run

Run on nationalised Spanish bank sees customers withdraw €1BILLION... as

French government slashes its own pay by 30%
Shares in Bankia, Spain's fourth largest bank, fall 27% after media reports
Greece forms government, but will dissolve it tomorrow for new election
Francois Hollande slashes pay to 'highlight difference' with Sarkozy
A €1billion run on a recently nationalised Spanish bank has sparked further fears that the 17-nation eurozone is about to implode.

European markets fell as fears of a continent-wide contagion from goverment-less Greece's economic crisis also spread.

Shares in Bankia, Spain's fourth biggest bank formed in 2010 through a merger of seven struggling regional savings institutions, today plummeted by 27 per cent.

http://www.dailymail.co.uk/news/article-2145764/Run-nationalised-Spanish-bank-sees-customers-withdraw-1BILLION--French-government-slashes-pay-30.html?ito=feeds-newsxml

Potential Bank Runs in Greece Spark EU Contagion Panic

As the prospect of Greece leaving the eurozone dominates headlines around the world, Greeks are reportedly lining up at ATMs and financial institutions to withdraw their funds in what some analysts have already described as the start of a run on the banks. More than a billion euros have been withdrawn just in the last few days. And experts say the panic could soon spread to other fragile countries such as Italy and Spain.

Even Greek officials acknowledged that the nation’s banks were teetering on the verge of a catastrophe as panicky depositors rush to salvage what they can of their savings. According to minutes of meetings cited in news reports, President Karolos Papoulias told political leaders that Greece’s central bank chief knew “there was great fear that could develop into a panic." He also warned that the banking system might run out of money, posing a “threat to our national existence.”

While those fears may not have become a full-blown bank-run crisis just yet, that moment could be fast approaching. "Withdrawals and outflows by 4:00 pm when I called him exceeded 600 million euros and reached 700 million euros," Papoulias was quoted as saying, citing central bank boss George Provopoulos. "He expects total outflows of about 800 million euros, including conversions in German Bunds and other such things."

http://www.thenewamerican.com/world-news/europe/item/11409-potential-bank-runs-in-greece-spark-eu-contagion-panic

[Fishman]

My canary is starting to swoon. Thanks Expat for keeping us up to date.

[eXpat]

My canary is starting to swoon. Thanks Expat for keeping us up to date.

Thank you Fish! BTW, I have a morsel for your canary!
Fitch Calls For Capital Increase As Run On Spanish Banks Continues

Fitch ratings has called for a huge increase in capital reserves at the world’s biggest banks today as the markets reel from the run on Spain’s banks. The agency recommended banks across the world raise a total of $556 billion an increase of 23 percent over what the banks are currently holding.

Fitch made the recommendations on 29 of the world’s systemically important banks. That list includes Goldman Sachs Group (NYSE:GS), HSBC Holdings plc (LON:HSBA), Mizuho Financial Group Inc. (TYO:8411), Bank of America Corp. (NYSE:BAC) Societe General S.A. (EPA:GLE), and JPMorgan Chase & Co. (NYSE:JPM).

Those banks are judged to be vital to the functioning of the global financial system and failure in any of the institutions would

The recommendation comes after crisis hit Spanish and Greek banks. Financial institutions in the European nations saw large levels of deposits removed in recent days. Bankia, a conglomerate of Spanish Banks formed in 2010 to help save the country’s financial system, saw more than 1 billion euro withdrawn in the last week alone. The firm’s shares tumbled today by more than 25%.

http://www.valuewalk.com/2012/05/fitch-calls-for-capital-increase-after-run-on-spanish-banks/
Bankia´s chart says it all:

[Revi]

La situacion es muy mala. Bummer. What will this mean for the rest of the world? Is this the beginning of a global bank run?

[smiley]

<edit> El mundo has now removed the original article from their website </>

(Reuters) - The Spanish government denied a newspaper report on Thursday that customers had withdrawn more than 1 billion euros (822 million pounds) from the partly nationalised lender Bankia (BKIA.MC) over the past week
....
Economy Secretary Fernando Jimenez Latorre denied a deposit flight was underway. "It's not true that there is an exit of deposits at this moment from Bankia," Latorre, a senior official who reports to the economy minister, told a news conference.
....
Bankia tried to reassure its customers. "Bankia's operations have been within their usual parameters at the branch network over the past few weeks," it said in a statement. "The trend in activity shows deposit balances will not register substantial changes in the next few days."
.....
There was no sign of any abnormal activity at Bankia branches in Madrid on Thursday. A few clients told Reuters that they had checked in with their branch manager regarding their deposits, but most said they were not moving them.

"I've got two accounts in Bankia and up to now I haven't shut them. I'm not even considering it," said Jose Ignacio Gonzalez, 42. "It has to be safer with state backing. It's got a guarantee."

http://uk.reuters.com/article/2012/05/1 ... 9220120517

Makes sense there hasn't been a single bank run on a nationalised bank, in contrast most nationalised banks have seen an inflow of capital since the savers see nationalisation as a form of insurance.

This is starting to look like the famous secret EU meeting last year, and some other articles. And in the summit case confirmed as being caused by a journalist being fed complete misinformation by an anonimous source and not cross-checking his information in his hurry to make the presses.

Wouldn't surprise me if some people make a lot of money over planting these types of stories at the right moments, and having the right shorts in place.

BRUSSELS - The European Commission has said it its ‘not aware' of any secret emergency meeting in Luxembourg on Friday evening to discuss the exit of Greece from the eurozone, as German newsweekly Der Spiegel's online edition has reported.

Meanwhile, the spokesman for eurogroup chief and Luxembourg Prime Minister Jean-Claude Juncker, Guy Schuller told Reuters: "I totally deny that there is a meeting, these reports are totally wrong."

The Dutch finance minister is in Rotterdam, not Luxembourg tonight, the country's foreign minister reported.

http://euobserver.com/9/32281

[Pops]

Those banks are judged to be vital to the functioning of the global financial system and failure in any of the institutions would

Would what?

[radon]

Those banks are judged to be vital to the functioning of the global financial system and failure in any of the institutions would

Would what?

Probably was meant to be something unspeakable, like "release Voldemort from his CDS cage".

[eXpat]

<edit> El mundo has now removed the original article from their website </>

(Reuters) - The Spanish government denied a newspaper report on Thursday that customers had withdrawn more than 1 billion euros (822 million pounds) from the partly nationalised lender Bankia (BKIA.MC) over the past week
....
Economy Secretary Fernando Jimenez Latorre denied a deposit flight was underway. "It's not true that there is an exit of deposits at this moment from Bankia," Latorre, a senior official who reports to the economy minister, told a news conference.
....
Bankia tried to reassure its customers. "Bankia's operations have been within their usual parameters at the branch network over the past few weeks," it said in a statement. "The trend in activity shows deposit balances will not register substantial changes in the next few days."
.....
There was no sign of any abnormal activity at Bankia branches in Madrid on Thursday. A few clients told Reuters that they had checked in with their branch manager regarding their deposits, but most said they were not moving them.

"I've got two accounts in Bankia and up to now I haven't shut them. I'm not even considering it," said Jose Ignacio Gonzalez, 42. "It has to be safer with state backing. It's got a guarantee."

http://uk.reuters.com/article/2012/05/1 ... 9220120517

Makes sense there hasn't been a single bank run on a nationalised bank, in contrast most nationalised banks have seen an inflow of capital since the savers see nationalisation as a form of insurance.

This is starting to look like the famous secret EU meeting last year, and some other articles. And in the summit case confirmed as being caused by a journalist being fed complete misinformation by an anonimous source and not cross-checking his information in his hurry to make the presses.

Wouldn't surprise me if some people make a lot of money over planting these types of stories at the right moments, and having the right shorts in place.

BRUSSELS - The European Commission has said it its ‘not aware' of any secret emergency meeting in Luxembourg on Friday evening to discuss the exit of Greece from the eurozone, as German newsweekly Der Spiegel's online edition has reported.

Meanwhile, the spokesman for eurogroup chief and Luxembourg Prime Minister Jean-Claude Juncker, Guy Schuller told Reuters: "I totally deny that there is a meeting, these reports are totally wrong."

The Dutch finance minister is in Rotterdam, not Luxembourg tonight, the country's foreign minister reported.

http://euobserver.com/9/32281

Spanish government is doing damage control , which is what any responsible governement would do. Try to freeze the situation and kick the can a bit further. After all no one wants to live in a failed state.
Spain moves to calm bank fears

The Spanish government called for investor calm on Thursday as shares in Bankia, the country’s second-largest bank by domestic deposits, tumbled by nearly 30 per cent and Moody’s conducted a sweeping downgrade of the country’s lenders.

Further fuelling the sense of unease among eurozone banks, the government in Cyprus announced it would underwrite a €1.8bn capital raising by Popular Bank of Cyprus that analysts said could force the tiny island nation to seek bailout assistance from Brussels.

http://www.ft.com/intl/cms/s/0/1c0fd102-a046-11e1-90f3-00144feabdc0.html#axzz1ux5f0xo0
Today was a very bad day for Spain, not only Bankia´s shares fell during the day to a staggering 30% at one point (http://www.guardian.co.uk/world/2012/may/17/spain-denies-bankia-customers-rushing-to-withdraw?newsfeed=true)
But also Moody downgraded 4 important municipalities (and 16 banks) to http://www.prensaescrita.com/adiario.php?codigo=S&pagina=http://www.elpais.com junk bond level. Not to mention the beating in the stock market.
http://uk.reuters.com/article/2012/05/17/uk-spain-economy-idUKBRE84G0DC20120517.
And the biggest intraday drop in the stock market since 1987 (link in spanish) http://www.prensaescrita.com/adiario.php?codigo=S&pagina=http://www.elpais.com
The spin machine is working overtime in Spain, however is plain to see after checking the public opinions in blogs and online newspapers, that the spaniars are not buying it.

[eXpat]

Meanwhile in sunny Greece: another day, another queue at the bank
Greeks Pull Cash Out of Banks as Confidence Wanes

Worried for the future, Greeks are pulling money out of banks at an increasing rate and either transferring it abroad when they can or hiding it at home.

"I know a lot of people have drawn their money from the bank," said Apostolis Manafas 57, unemployed, of Athens. "I have friends that even hide their money in their closets. It reminds me of our grandparents and old Greek movies, where people sewed their savings in their mattresses."

Greeks withdrew more than $900 million Monday and another $600 million Tuesday, according to the Greek Central Bank. While deposits have been steadily leaving banks since the start of the country's debt problems in 2009, this week's outpouring of cash reflects a new level of panic, analysts say.

http://abcnews.go.com/Business/greeks-pull-cash-banks-confidence-wanes/story?id=16368493#.T7WCZnmXmSo

Welcome to the 21st Century Bank!

[smiley]

Spanish government is doing damage control , which is what any responsible governement would do.

The spin machine is working overtime in Spain

So what your saying is that the Spanish government is controlling Reuters? I mean El Mundo posts an article, the withdraws it, the government denies it, the bank denies it, Reuters who has people on the ground denies it. Wouldn't you agree there is a slight chance this article was based on incorrect information?

Today was a very bad day for Spain, not only Bankia´s shares fell during the day to a staggering 30% at one point

Which is exactly my point. If you had foreknowledge of the publication of this article you could have made a lot of money. Both on the run down as the 20% rise after it became apparent that the information was incorrect.

And the biggest intraday drop in the stock market since 1987 (link in spanish)

Must have had pretty calm markets since 1987

[eXpat]

So what your saying is that the Spanish government is controlling Reuters? I mean El Mundo posts an article, the withdraws it, the government denies it, the bank denies it, Reuters who has people on the ground denies it. Wouldn't you agree there is a slight chance this article was based on incorrect information?

Reuters, the Bank and the spanish gov can deny it, but the facts are:

-€1bn was pulled from the Spanish bank Bankia since May 9 if is not a bank run, very much looks like one.
http://rt.com/business/news/europe-banks-withdrawal-deposits-481/

-Shares in Bankia, reached a low of 29pc at one point today and ended down 13.53pc.
http://www.telegraph.co.uk/finance/debt-crisis-live/9271371/Debt-crisis-as-it-happened-May-17-2012.html

-According to the newspaper ABC Bankia lost €11,5 millons trying to buy their own shares to stop the slide:
http://www.abc.es/20120518/economia/abci-bankia-acciones-autocartera-perdida-201205172244.html

I would say that is a bit candid to take at face value what the bosses of a bank that is under massive withdrawals have to say about the stability of their own bank, don´t you think? And the spanish government IS in this case, the biggest partner/stakeholders of Bankia (45%), no exactly an impartial position. IMO.
http://globaleconomicanalysis.blogspot.com.ar/2012/05/spain-nationalizes-bfa-and-45-of-bankia.html
In any case the next days will give us a clear image.
And since we are talking about the people in the ground of Routers, this is the certainty they have about the situation:

"El problema ahora mismo es que no se sabe lo que Bankia vale ahora ni cuánto dinero va a tener que poner finalmente el Estado en Bankia. La incertidumbre es absoluta y así es imposible valorar nada", dijo una operadora a Reuters.
http://www.eleconomista.es/mercados-cotizaciones/noticias/3973029/05/12/Bankia-se-hunde-un-23-en-bolsa-hasta-1277-euros-por-accion.html
(Translation: The problem now is that we do not know what is Bankia value right now or how much money will have to finally put the state in Bankia. The uncertainty is absolute and is impossible to evaluate anything, "said an operator to Reuters.)

And the biggest intraday drop in the stock market since 1987 (link in spanish)

Must have had pretty calm markets since 1987

I don´t know about that, but that is what the article that i linked says, and it hasn´t been rebutted, and yes, that includes 2008
(Text in spanish from the original article)

La Bolsa no encuentra suelo. El desplome acumulado por el índice Ibex 35 desde los máximos previos a la crisis ha pasado a ser hoy el mayor en la historia del índice, calculado desde 1987. Con la caída de hoy, el retroceso desde el máximo intradía de 16.040,4 puntos del 9 de noviembre de 2007 es ya el 59,4%. Nunca antes el índice había perdido tanto terreno desde un máximo.

http://www.prensaescrita.com/adiario.php?codigo=S&pagina=http://www.elpais.com

Do you want more detail in the situation? There is internet! get first hand information! check the spanish newspapers and the economic blogs, I did and they don´t show a pretty picture. I´m reading some comments about what the gov says about the situation, and they are a bit, how would i put it? : "unsavory".
Some links for your perusal:
http://www.republica.com/2012/05/17/con-bankia-en-caida-libre-moodys-rebaja-entre-uno-y-tres-escalones-la-nota-de-16-bancos-espanoles_494313/
http://www.larazon.es/noticia/4701-bankia-pide-calma-en-una-sesion-de-vertigo-en-bolsa
http://blogeconomia.com/2012/05/la-falsa-nacionalizacion-de-bankia/
http://www.elmundo.es/elmundo/2012/05/17/economia/1337257141.html#comentarios
http://www.eleconomista.es/mercados-cotizaciones/noticias/3974458/05/12/Bankia-relaja-las-caidas-del-29-y-cierra-en-los-142-euros.html

[smiley]

Reuters, the Bank and the spanish gov can deny it, but the facts are:
-€1bn was pulled from the Spanish bank Bankia since May 9 if is not a bank run, very much looks like one.

The definition of a fact is i) that it is true ii) that it is verifiable by an independent observer.

So how can I verify this "fact" of $1bn. All the links you have given me so far are based on the article by El Mundo as only source of information, which in it's turn is based on a single anonimous source.

Just think of it, all these hundreds of articles that appeared yesterday, are based on a single journalist, who claims to have gotten this information from someone close to (but not in) the board of directors. This source wasn't even in the meeting were the $1bn number was mentioned.

And then you go... Well OK that must be a fact then and everyone that says something differently must be lying. Sorry I need a bit more proof than that.

The markets doesn't seem to agree with the degree of factuality of the bank run. BKIA is +30%, SAN and others are also up for the day.

Bankia S.A.
STN: ES:BKIA GO
OVERVIEW €1.86
Change +0.44 +30.73%
Volume 4.28m
May 18, 2012 10:50 a.m.

And the biggest intraday drop in the stock market since 1987 (link in spanish)

La Bolsa no encuentra suelo. El desplome acumulado por el índice Ibex 35 desde los máximos previos a la crisis ha pasado a ser hoy el mayor en la historia del índice, calculado desde 1987. Con la caída de hoy, el retroceso desde el máximo intradía de 16.040,4 puntos del 9 de noviembre de 2007 es ya el 59,4%. Nunca antes el índice había perdido tanto terreno desde un máximo.

Sorry for asking, but can you actually read Spanish, or are you bablefishing?

What this snippet quite clearly states is that the decline from the "intraday high" of 2007 to the current low of 2012 is the largest in history. That's a five year period not intraday. Intraday the IBEX dropped -1.1%.

If you want I can give you a hand in translating Spanish.

[eXpat]

Reuters, the Bank and the spanish gov can deny it, but the facts are:
-€1bn was pulled from the Spanish bank Bankia since May 9 if is not a bank run, very much looks like one.

The definition of a fact is i) that it is true ii) that it is verifiable by an independent observer.

So how can I verify this "fact" of $1bn. All the links you have given me so far are based on the article by El Mundo as only source of information, which in it's turn is based on a single anonimous source.

Just think of it, all these hundreds of articles that appeared yesterday, are based on a single journalist, who claims to have gotten this information from someone close to (but not in) the board of directors. This source wasn't even in the meeting were the $1bn number was mentioned.

And then you go... Well OK that must be a fact then and everyone that says something differently must be lying. Sorry I need a bit more proof than that.

The markets doesn't seem to agree with the degree of factuality of the bank run. BKIA is +30%, SAN and others are also up for the day.

Bankia S.A.
STN: ES:BKIA GO
OVERVIEW €1.86
Change +0.44 +30.73%
Volume 4.28m
May 18, 2012 10:50 a.m.

And the biggest intraday drop in the stock market since 1987 (link in spanish)

La Bolsa no encuentra suelo. El desplome acumulado por el índice Ibex 35 desde los máximos previos a la crisis ha pasado a ser hoy el mayor en la historia del índice, calculado desde 1987. Con la caída de hoy, el retroceso desde el máximo intradía de 16.040,4 puntos del 9 de noviembre de 2007 es ya el 59,4%. Nunca antes el índice había perdido tanto terreno desde un máximo.

Sorry for asking, but can you actually read Spanish, or are you bablefishing?

What this snippet quite clearly states is that the decline from the "intraday high" of 2007 to the current low of 2012 is the largest in history. That's a five year period not intraday. Intraday the IBEX dropped -1.1%.

If you want I can give you a hand in translating Spanish.

Ok, clearly you are in the mood to argue about nothing, so good luck with that, this is my last post about this issue, I going to note however that you keep claiming the original article to el mundo, i have pointed out several sources, most of them spanish themselves that show those numbers (or do you think all the spanish newspapers and blogs are waiting what "el mundo" has to say to publish their news??), if you want to keep grasping to that article, be my guest, whatever rocks your boat.
A regarding the spanish language, i´m fluent in spanish, italian and portuguese, currently i´m living in southamerica, so my spanish skills are quite well, don´t really care about your cockiness this time of the day, BTW, what part of " Nunca antes el índice había perdido tanto terreno desde un máximo" you don´t understand? .

[eXpat]

UK customers worried about savings in Santander:
Santander UK insists British savers' money is safe after Kent county council pulls overnight deposit account

Santander UK has laid out the safety measures it has in place to prevent potential difficulties at its Spanish parent spreading to its British customers.

The bank moved to reassure UK customers after Kent County Council said it would no longer use the bank for overnight deposits after the Spanish government was forced to take measures to ensure the country's banks are safe from collapse.

On Friday, the government in Madrid announced all toxic loans at the country's banks will be placed in ‘bad bank’ holding companies and banks will be required to raise and set aside an extra €30billion (£24billion) against their good mortgage loans.
The Spanish government also took a 45 per cent stake in Bankia, Spain’s fourth-biggest bank, as its exposure to the failing property market proved unmanageable.

That followed a downgrade of Spanish banks by ratings agency S&P at the end of last month. The banks, including Banco Santander, saw their ratings cut following a downgrade to Spain overall, but S&P made clear that Santander UK - the UK arm - was not exposed to the same risks as its parent bank and that it did not see any need to alter its rating.

The latest funding measures impact on Banco Santander, the Spanish banks that owns 100 per cent of shares in Santander UK. The UK operation said that they posed no risk to UK accounts, and that ‘money raised in Britain stays in Britain’.

http://www.thisismoney.co.uk/money/news/article-2144653/Santander-UK-says-British-savers-money-safe-Kent-County-Council-pulls-account.html

Santander was one of the banks affected by the downgrade yesterday:
Moody's downgrades Santander UK along with 16 Spanish banks

The credit rating agency Moody's has downgraded 16 Spanish banks along with Santander's UK arm, citing the Spanish government's reduced ability to shore up the banks.

Santander UK, whose rating was lowered to A2 – a notch higher than its Spanish parent – insisted there was no impact on its business and that it was an autonomous subsidiary with 90% of its assets held in the UK, where it is also regulated. Moody's admitted it was unlikely that the UK Financial Services Authority would allow Santander UK to substantially weaken itself in order to support the parent. increasing instability.

Earlier Moody's had also downgraded four regions in Spain.

The moves from the credit rating agency came after a day of fears that Spain will be the next domino to fall if Greece leaves the euro, as the country was forced to deny that there was a run on its fourth-biggest lender, Bankia.

http://www.guardian.co.uk/world/2012/may/17/spain-denies-bankia-customers-rushing-to-withdraw?newsfeed=true

[smiley]

Ok, clearly you are in the mood to argue about nothing,

Wait a second, A few posts earlier you present this article as clear proof of a contangion and the falling apart of Spain. Then when I question the validity of the claims made in the article you suddenly hit the reverse and say that the article equates to nothing.

BTW, what part of " Nunca antes el índice había perdido tanto terreno desde un máximo" you don´t understand?

The part which translates to "intraday". Sorry but you cannot BS yourself out of this one

[Ferretlover]

Even lower...
Fitch downgrades Greek banks after sovereign cut

WASHINGTON — Fitch lowered its ratings of Greek banks Friday in the wake of its cut of the country's sovereign rating.

Fitch put the new rating for the National Bank of Greece, Efg Eurobank Ergasias, Alpha Bank, Piraeus Bank and Agricultural Bank of Greece at CCC, down from B-minus, in the mid-level range for "speculative" or junk bonds. The move came a day after Fitch cut Greece's sovereign rating to CCC, or "vulnerable to default", over the increased risk that the country would be forced to leave the eurozone.

"In the event that the new general elections scheduled for 17 June fail to produce a government with a mandate to continue with the EU-IMF program of fiscal austerity and structural reform, an exit of Greece from (the eurozone) would be probable, and/or this could be followed by a withdrawal of international support to Greek banks," Fitch said.

article

[dorlomin]

Greeks are claiming Merkel said they should have a referendum on membership. Germans denying she did.

[eXpat]

Ireland 'may need' second bailout

Ireland's bailed-out banks may need as much as €4 billion more loan loss provisions than assumed in stress tests last year, which could "tip the balance in favor" of the country requiring a second aid program, Deutsche Bank said in a report today.

"A new, even modest, increase in capital requirements could deter sovereign investor participation and tip the balance in favor of the sovereign requiring a second loan program," said Deutsche Bank analysts David Lock and Jason Napier.

The government's plan to introduce new personal insolvency laws creates "risks", even as politicians and the financial regulators seek to avoid widespread residential mortgage debt forgiveness, the bank said.

"Although resilient during 2009 and 2010, mortgage arrears have risen sharply over the past year, house prices are continuing to fall, market liquidity is limited, and over half of customers are now in negative equity," said Deutsche Bank analysts in the report.

http://www.irishtimes.com/newspaper/breaking/2012/0518/breaking28.html

[dolanbaker]

Ireland 'may need' second bailout

Ireland's bailed-out banks may need as much as €4 billion more loan loss provisions than assumed in stress tests last year, which could "tip the balance in favor" of the country requiring a second aid program, Deutsche Bank said in a report today.

"A new, even modest, increase in capital requirements could deter sovereign investor participation and tip the balance in favor of the sovereign requiring a second loan program," said Deutsche Bank analysts David Lock and Jason Napier.

The government's plan to introduce new personal insolvency laws creates "risks", even as politicians and the financial regulators seek to avoid widespread residential mortgage debt forgiveness, the bank said.

"Although resilient during 2009 and 2010, mortgage arrears have risen sharply over the past year, house prices are continuing to fall, market liquidity is limited, and over half of customers are now in negative equity," said Deutsche Bank analysts in the report.

http://www.irishtimes.com/newspaper/breaking/2012/0518/breaking28.html

The only thing that's stopping the mortgage arrears issue really becoming a crisis is the fact that many mortgages are on ECB tracker rates and the banks are currently losing on these.

Shift those mortgages onto variable rate and the effect would be disasterous, the default rate would go through the roof. People here can't just walk away like in the US, if they could, many would!