Posts Tagged ‘ bail out ’

EC document says Spanish banks do not need new EU aid at present

EC document says Spanish banks do not need new EU aid at present.

A document prepared by the European Commission and the European Central Bank says that Spain’s banks do not at present need further European aid.

The report said that there was no reason at present to foresee further programme disbursements, according to news agency Reuters.

So far, Spanish lenders have received financial aid from Europe of €41.3 billion euros from a potential line of up to €100 billion euros.

The aid was used for the recapitalisation of state-aided banks and a capital injection into a so-called bad bank that took on bad loans and devalued property assets from the financial system.

The report, which also involved experts from the International Monitory Fund as an independent monitor, said ensuring bank profitability represents a major challenge given low interest rates and rising bad debts.

It said that a prolongation of the negative trends in unemployment, real incomes and solvency of companies beyond current expectations would increase risks particularly for weaker banks.

Concern was expressed in the document on the stability of the Spanish financial sector, which may still be impaired by uncertainty over burden sharing, as well as to what extent losses can be passed on to investors in the banks.

There is also further uncertainty over arbitration processes by which some investors will seek to prove they were missold complex hybrid investments in the banks, the document said.

Re blogging & commenting @nigeljgreen -No Euro Bank is Safe Now

I read the below this morning and to me it just emphasized the rule ” risk reward ” for the interest you need to take into account there is a chance for loss .
All the bailed out banks/ country , one thing is always apparent before the crash these banks were offering higher interest than the counterpart , why ? As the market saw they were a higher risk , they appealed to human greed factor ,
My personal view is people need to relies risk & reward , sometimes you win and sometimes you loose , that’s capitalism .

At the moment it’s capitalism with government guarantee !!!

Lets go back to basics

Tony Evans

No Euro Bank Is Safe Now

MARCH 26, 2013
The rescue of Cyprus sets precedents for the euro zone that may stick in the memory of depositors and bondholders alike as investors debate who will next fall victim to the debt crisis. Under the terms of the agreement struck yesterday in Brussels, senior Cypriot bank bond holders will take losses and uninsured depositors will be largely wiped out.

The message that savers of all types can be coerced into helping a cash-strapped natio will make investors more fearful they’ll be targeted if Italy, Spain or even Greece again is next in line to need help. The risk is that bank runs and bond market selloffs become more likely the moment a country applies for a new rescue.

We now have a new type of rule and everyone within the euro zone has to sit down and see what that implies for their own finances.

Until now, euro region officials had left bank depositors and senior bondholders untouched as they tried to rescue the bloc’s struggling economies .

The Irish banking system collapsed partly because its government refused to renege on a guarantee to deposit holders made after Lehman Brothers Holdings Inc. collapsed.

The Cyprus crisis has opened up some precedents that will make investors more worried about how future euro zone crises will evolve.

They will swear black and blue that Cyprus is a unique case but so was Greece. I personally believe this crisis in particular has been handled badly and will cause problems in the next few months in many other countries.

Spain’s economy minister yesterday was keen to point out yesterday that a Cyprus-style bailout could not be extrapolated to any other country.
Does anyone believe him though ?
Investors should take advice from a financial advisor. There is potentially another crisis in Euro banks I believe.

Nigel Green deVere Group

Blog written 26th March

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