News of Spain
In June 2009, before the evidence of a huge hole in its banks, the Spanish government pactaba the creation of the FROB, the public fund which was used to rescue banks (or their customers) in case of bankruptcy. Three years later, in June 2012, the evidence became reality and Spain formally requested the rescue of its financial sector. And five months later, he created the State SAREB, the bad bank that had to stay the toxic assets of the entities. There is some consensus: all served to save a sector that started very touched crisis.
One of the European countries that have experienced the crisis more parallel in Spain, also peripheral Italy, lives this first half of the year a true banking viacrucis that since the Spanish perspective is all revival . The situation of the first and the third Italian bank (UniCredit and Monte dei Paschi di Siena) course once in recent days for the price of two entities and has dragged European markets amid a new wave of suspicions about the state the financial sector.
The problems of these entities in Spain sound familiar: excessive real estate exposure, fall in the stock market and lack of profitability to cope. In fact, since early this year and we are openly talking about different ways to help rescue banks to ensure solvency is now very doubtful. What seems clear, but the key is how.
The European banking rules (which was not in force when the rescue Spanish banks became) provides that bailouts are now loaded on the shoulders of shareholders, creditors, bondholders and large depositors of banks. a cloud called Margrethe Vestager, European Commissioner responsible for Competition and last to avoid behaviors that can be interpreted as state aid appears on the horizon of Italian financial sector.
At the Italian authorities have not lacked imagination in April created Atlante, fund endowed alternative investment over 5,000 million with contributions from insurance companies, foundations boxes and the same banks, financial institutions also participated by the government. He also created, in January, a guarantee scheme that allowed transfer their outstanding claims their balance sheets of other entities, which would make the role of bad bank. The Commission approved this mechanism argue that it was not state aid but “state guarantees”. The problem is that this is not enough, as the portfolio of doubtful loans amounted to 350.000 million euros. In other words: of 100 euros that have lent the Italian banks, 17 are very unlikely recovery.
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The events have accelerated this week in the stock market meltdown. UniCredit had lost this year 63% of its value and Monte dei Paschi di Siena 77% when the European Central Bank asked on Monday to the latter company to reduce its percentage of bad loans up to 20% of the total by 2018. This reduction is equivalent to the output of its balance of 10,000 million euros of liabilities.
injections of public money
This has made the social democratic government of Matteo Renzi has thought that more drastic measures envisaged so far. According to Il Sole 24 Ore, the Executive studies make an injection of between 2,000 and 3,000 million euros in the bank to compensate for this European petition. The idea would be to do so through a capital increase with public funds. That is, by injecting pure and hard (as they had Bankia or CatalunyaCaixa) money, contravening European legislation.
This option confirms what moved the Financial Times on the same line: that Renzi would request a measure of exceptionality once has occurred Brexit and to the fall risk in the financial system to inject money to entities without imposing losses to its shareholders.
The answer is anyone’s guess Brussels. If you are given the green light to these plans might know next July 29, when the European Banking Authority will publish the results of stress tests to 51 entities. The decision will be key to Italian banks for the third country of the Union and the rest of Europe.
Three new British funds decree the corralito by Brexit
Henderson, Canada Life and Threadneedle Columbia announced yesterday the blockade of their funds in the UK to prevent investors draw their money. In total there are now six funds that have applied the corralito and in just one day have blocked half of the country real estate funds, totaling 25,000 million pounds. The move comes with the delivery of nine historical lows: yesterday traded below $ 1.28, its lowest level since 1985.
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