http://www.zerohedge.com/news/italy-just-bailed-out-worlds-oldest-surviving-bank
Submitted by Tyler Durden on 06/26/2012 08:03 -0400
and......
http://www.businessinsider.com/willem-buiter-spain-and-italy-will-need-bailouts-2012-6
http://www.zerohedge.com/news/spain-borrowing-costs-triple-one-month-italian-yield-firmly-above-6-again
Submitted by Tyler Durden on 06/26/2012 07:05 -0400
http://www.guardian.co.uk/business/2012/jun/26/moodys-downgrades-spain-again
( How long before Stourmaras sees the books with predictable results..... does he do a Rapanos - as per William Banzai7 ? )
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/06/2012_449005
Italy Just Bailed Out The World's Oldest Surviving Bank
Some people know Banca Monte dei Paschi di Siena as one of the biggest banks in Italy (lately best known for being either halted down, about 90% of the time, or up, the remainder) with 3,000 branches, 33,000 employees and 4.5 million employees. Others know it for being the world's oldest surviving bank, founded in 1472 by the magistrate of the then city-state of Siena. Most will henceforth know it as the first Italian bank bailed out in 2012 using the old 2009 ponzi scheme known as "Tremonti bonds", whereby the bank sales bonds to a guaranteed buyer - the Italian government - in the process receiving critical cash to continue operating. The initial bailout bid: €1 billion in Tremonti bonds. The final number: much, much higher, but it likely won't be known for at least days. Which incidentally is an event which was largely expected. Recall on June 13 we wrote: "Forget Three Months: Italy May Have Two Weeks Tops, As "It Already Is Where Spain Is Heading." It is now 13 days later and the bailouts have begun.
The chart of BMPS.IM says it all. Luckily the final outcome will be resolved in under 20 cents.
And from Bloomberg.
Italy has approved a decree to help banks to boost capital through the sale of bonds to the government, as Banca Monte dei Paschi di Siena SpA prepares to raise at least 1 billion euros ($1.3 billion) using the securities, a government official said.Ministers passed the measure at a Cabinet meeting in Rome today, said the official, who asked not to be identified because the matter isn’t public yet. The legislation probably will be similar to the decree approved in 2009 that allowed lenders to issue so-called Tremonti bonds, which were named after then- Treasury Minister Giulio Tremonti, a person familiar with the matter said earlier.Monte Paschi, which is among Italian lenders that must raise capital as part of Europe’s plan to end the sovereign-debt crisis, has a capital shortfall of 3.3 billion euros, according to the European Banking Authority. The bank must also repay 1.9 billion euros of state aid provided in 2009.Monte Paschi was one of four lenders which got state aid under the previous law. Banco Popolare SC received 1.45 billion euros, Banca Popolare di Milano Scarl obtained 500 million euros and Banca Piccolo Credito Valtellinese Scarl got 200 million euros.“The government measure is clearly being done to help Monte Paschi,” said Angelo Drusiani, who manages about 3 billion euros at Banca Albertini Syz & C. in Milan. “I don’t think other banks need to apply for these securities to raise capital,” he said.Monte Paschi fell 3.7 percent to 19.39 cents before being halted for volatility in Milan, giving the bank a market value of 2.4 billion euros. The stock has dropped 23 percent this year, compared with a 3 percent decline of the Bloomberg Europe Banks and Financial Services Index.Monte Paschi’s board meets today to approve a plan that includes capital measures to comply with the European Banking Authority’s targets. The Siena, Italy-based bank may sell at least 1 billion euros of bonds to the government as part of its plan, said a person yesterday. The bank may also restructure the old issue, said the person.The lender has already covered more than 2 billion euros of its capital shortfall through the conversion of hybrid bonds and the implementation of new internal risk models, Chief Executive Officer Fabrizio Viola said last month.Monte Paschi’s first-quarter profit dropped 61 percent to 54.5 million euros after setting aside more money for bad loans, it said May 15. Loan-loss provisions in the quarter rose 58 percent to 434 million euros.
and......
http://www.businessinsider.com/willem-buiter-spain-and-italy-will-need-bailouts-2012-6
From Citi's Willem Buiter...
- After Spain’s still-to-be-finalised euro area bank bail-out, we expect it to be in a troika programme with sovereign conditionality, quite possibly soon.
- After Spain’s bank bail-out, Cyprus or Italy will be the next euro area countries to apply for a troika bail-out, in our viewWe believe the need for a sovereign bail-out for Spain and Italy will be driven by a lack of affordable access to market funding and a lack of credibility of the respective sovereigns’ commitments to engage in sufficient fiscal and structural reform.
- These sovereign bail-outs are highly likely to involve fiscal and structural reform conditionality for the sovereign. They are also likely to aim to retain partial market access for Italy and Spain, relying on a mix of ECB-subsidised funding and financial repression to ensure take-up of the residual government funding needs by domestic banks and other financial institutions.
- Spain or Italy may be able to access one of the precautionary EFSF/ESM programmes, but those programmes would still likely come with sovereign conditionality. Primary or secondary market purchases by EFSF/ESM could be part of either a precautionary or a normal EFSF/ESM programme. Any programme would require a request from Spain or Italy and unanimous non-objection by the Eurogroup.
He goes onto argue that just partial programs will show how the current bailout funds are too small and will need expanding of both monetary firepower and abilities.
http://www.zerohedge.com/news/spain-borrowing-costs-triple-one-month-italian-yield-firmly-above-6-again
Spain Borrowing Costs Triple In One Month, Italian Yield Firmly Above 6% Again
Not much to add to Reuters summary of the overnight Spanish bill auction. The good news: the country that is not Uganda sold €3.08 billion compared to a range sought of €2-3 billion. The bad news: the price paid to sell this debt more than makes up for any optics that this was a good deal. "Spain's short-term borrowing costs nearly tripled at auction on Tuesday, underlining the country's precarious finances as it struggles against recession and juggles with a debt crisis among its newly downgraded banks.The yield paid on a 3-month bill was 2.362 percent, up from just 0.846 percent a month ago. For six-month paper, it leapt to 3.237 percent from 1.737 percent in May... Spain sold 3.08 billion euros of its short-term debt on Tuesday, slightly above its target amount, even as the Treasury paid the highest rates to sell the paper since November and met with falling demand from the country's struggling banks. The Treasury sold 1.6 billion euros of a 3-month bill, and 1.48 billion euros of a 6 month bill, which together was just above the 2-3 billion euro target set. The Treasury has overshot its sales target in recent auctions, showing it still is capable of selling its debt even if has to rely on domestic banks to do so as international investors avoid Spanish debt." Here's a hint to whoever is pretending to be in charge of Spanish finances: selling more debt than the "max" just to show you still have bond market access (i.e., debt bought by just downgraded Spanish banks) while paying ridiculous interest on this "optical success" is about the dumbest thing a broke country can do. But who are we to judge. We will leave that to the bond market. Below we show the yield on the Spanish 10 Year, which in two days has retraced the entire move tighter in the past week.
Elsewhere in Italy we get more good news:
- ITALY APRIL SALES DECLINE 6.8% YOY, BIGGEST DROP SINCE AT LEAST JAN. 2001
- ITALY SAID TO REVIEW DECREE TO ALLOW BANKS TO SELL BONDS TO GOV
That, and of course this:
Italy paid 4.712 percent to sell two-year paper on Tuesday, a new high since December, as investor doubts have grown about whether a European summit later this week will deliver a decisive answer to the bloc's debt crisis.
Pressured by rising interest payments on its 1.95 trillion euro debt and a deepening economic recession, speculation has grown that Italy is at risk for being forced to seek external assistance to continue finance its debt.It sold a total of 3.9 billion euros in zero-coupon and inflation-linked bonds - near the top of its planned range - ahead of a six-month bill sale on Wednesday and a more challenging offer of five- and 10-year debt for up to 5.5 billion euros on Thursday.The yield on zero-coupon bonds due in May 2014 rose sharply from the 4.04 percent level Rome paid only a month ago on the same paper. The sale was covered 1.65 times, roughly in line with May's slightly bigger auction.
Which brings us to another diagonal bond yield chart over the past three days: that of Italian bonds.
and......
http://www.guardian.co.uk/business/2012/jun/26/moodys-downgrades-spain-again
Bloomberg's Linda Yueh has tweeted the new Greek finance minister's name:
( How long before Stourmaras sees the books with predictable results..... does he do a Rapanos - as per William Banzai7 ? )
More details from European Commission President José Manuel Barroso's press conference in Brussels.
Some news in from Greece where our correspondent Helena Smith says while the quest for a new finance minister is ongoing, officials are promising that the holder of the post will be named today.
In the wake of the resignation of Vasillis Rapanos, it's all steam ahead to find a new finance minister and, say, officials "as soon as possible." Highlighting the urgency of the need for a replacement, prime minister Antonis Samaras, though still recovering from an emergency eye operation himself, met with senior aides at his home until late into the night to discuss the matter.
As head of a three party coalition whose junior partners are from the left, the conservative leader is keen to appoint a non-political figure to the post – the most crucial position in the Greek cabinet. "We will have a new finance minister," the government spokesman Simos Kedikoglou said this morning adding that he expected his name (no women are being considered) to be announced "within the day."
On the merry-go-round that is the great Athens rumour mill, the hum is that the new finance minister will be a banker or an economics professor who, like Rapanos, is well-briefed on the parlous state of the debt-choked country's public finances. One name being considered is the Oxford-trained economist Yiannis Sournaras a choice that is known to be supported by the socialist Pasok party.
The minister is likely to be announced after a meeting that will take place at Samaras' home at 7:30 PM Greek time between the prime minister and the leaders of his administration's junior partners.
Rapanos, who has long suffered from frail health and is believed to have told Samaras of his intention to step down shortly after his fainting fit last Friday, may well stay on to give behind the scenes advice. The former head of the National Bank of Greece, who was released from the hospital in the last hour, will go down as the first minister to resign before even formally being sworn in. Although government officials are putting on a brave face, it is clear the high drama has cast a shadow over the new administration in the run up to Thursday's critical EU summit.Samaras' inability to return to active duty has meant that the coalition, which controls 179 seats in the 300-member Greek parliament, will face further delays before it receives a vote of confidence after a parliamentary debate on its policy program as Greece's constitution dictates.
The unexpected set-backs have meant that a visit by the inspectors from Athens' troika of creditors at the EU, ECB and IMF has also been put on hold. Without their assessment of the state of Greek finances, EU mandarins have said it will be impossible to decide what the next steps will be in the Greek debt drama – and whether Athens should be given its next injection of cash or not.
Following weeks of political uncertainty in the wake of the country's inconclusive election in May, reforms are "way off target" EU policymakers say.
After much to do, it has finally been decided that the country's head of state president Carolos Papoulias will attend the forthcoming summit in place of Samaras who is under strict doctors' orders to restrict his movement until next Monday at the earliest.
...
The results of Italy's bond auction are also in. Two-year paper sold at 4.712% - the highest since December.
Some expert comment on the dire public sector finances from Olann Kerrison, head of product management at the foreign exchange specialists Moneycorp:
and......Plan A, it would appear, is kaput. The spike in public sector borrowing, to £17.9bn in May, is a body blow to the Chancellor and the coalition government's handling of the economy.
There is often a dip in tax revenues in May, following the end of the tax year, but this doesn't hide the fact that borrowing is significantly higher than in May 2011 when it was just £15.2bn.
The simple fact of the matter is that tax revenues are down — and borrowing up — because the economy is weak. Unfortunately, there is every chance the economy will weaken further in the months ahead as the Eurozone unravels.
Domestic demand is weak, and so is demand from overseas, especially from the Eurozone. This is decimating tax revenues and forcing the Government to borrow more.
The Labour spin machine will be all over these numbers, reiterating that austerity doesn't work.
Ian Traynor has written a full story on the European leaders radical plan to reshape the eurozone.
[They] plan to turn the 17 countries of the eurozone into a full-fledged political federation within a decade in an attempt to placate the financial markets by demonstrating a political will to save the single currency in the medium-term.
The incendiary proposals for a banking, fiscal, and economic unions resulting in a "political union" are to be debated at an EU summit on Thursday and Friday. Following two bad-tempered meetings of European leaders in Mexico and Rome over the past week, the Brussels summit looks likely to see major clashes over the future of Europe as well as the immediate crisis surrounding sovereign debt, bad banks, and the euro's survival.
You can read the whole of the report here.
The results of Spain's bond auction are out. Spain sold €3.0bn of short-term debt - but it came at price: the highest rates since November.
The yield on 3-month bonds was 2.362%, up massively from 0.846% last month. Six months bonds sold on a yield of 3.237% up from 1.737%.The ONS said public sector debt as a percentage of GDP (excluding financial interventions) now stands at 65% - the third highest on record.UK public borrowing figures for May are much higher than expected. The ONS said public sector net borrowing (excluding public sector interventions) came in at £17.9bn compared to £15.2bn last year.
More details are coming through about the meeting between finance ministers of Germany, France, Italy and Spain in Paris later today."We want to work with Germany," Moscovici told France Info radio, asked about the pressure on President Francois Hollande and German Chancellor Angela Merkel to reach an agreement on ways to curb the spiralling eurozone crisis."Tomorrow there is a meeting, which will be very important, between Francois Hollande and Angela Merkel and this evening I will receive the finance ministers: Mr. Schaeuble from Germany, Mr. Monti or Mr. Grilli of Italy and Mr. de Guindos of Spain along with the European Commissioner," Moscovici said."We are in an active phase of preparation of this summit."Hollande wants measures like mutualised debt and joint bank deposit guarantees to be worked on at the same time as moves towards deeper fiscal integration, while Merkel, wants an accord on closer integration before any other steps are taken.
The Greek English language paper Kathimerini reckons it knows who's going to replace Vassilis Rapanos as finance minister.Let's hope the new guy lasts longer than Rapanos, who resigned yesterday due to ill health less than a week after being appointed to the post.The Guardian's Europe editor, Ian Traynor, has got hold of a copy of the gang of four's master plan for the future of Europe and the Euro.Ian says the seven-page document from the four presidents - Herman Van Rompuy of the European Council, Mario Draghi of ECB, Jose Manuel Barroso of the European commission, and Jean-Claude Juncker of 17-country Eurogroup - details a 10-year plan based on 4 "building blocks" - banking union, fiscal union, economic union, political union.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/06/2012_449005
Port workers go to court over asset sales
The federation of Greek port workers unions asked the Council of State to overturn the transfer of the stakes to the Hellenic Republic Asset Development Fund, on the ground that it was unconstitutional, according to an e-mailed statement from the union on Tuesday. The government transferred stakes in the ports to the agency this year with a view to selling them to investors as part of a program to raise 50 billion euros ($63 billion) from asset sales by 2020. The sales are a condition set by the European Union and the International Monetary Fund for 240 billion euros of bailout loans. [Bloomberg] |
and.....
http://www.athensnews.gr/portal/1/56498
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1. Who will replace Rapanos? Monday night Vasillis Rapanos stepped down from the finance minister position, citing health concerns as his reason. In a letter of appreciation for Rapanos, Samaras wrote: "I want, first of all, to wish you a recovery from your health problem. I would like to thank you for the willingness with which you accepted the role ... and I hope that you will regain your strength soon and can contribute to the national effort. I know that we can count on your valuable services."
Among the names being floated as possible candidates for the finance minister post are former European Commissioner Stavros Dimas and former Greek Interior Minister Tasos Giannitsis, according to officials in New Democracy. Development Minister Kostis Hatzidakis and economist Yannis Stournaras are other names being discussed in the media as potential replacements.
2. Cyprus applies for bailout Cyprus became the fifth euro zone country to seek financial assistance from the EU's rescue funds on Monday. The country announced it was applying for a bailout for its banking sector hit by exposure to the crisis in Greece. Cyprus needs to raise at least 1.8 billion euros - equivalent to about 10 percent of its domestic output - by June 30 to satisfy European regulators about the health of Cyprus Popular Bank. Cyprus is expected to ask for more money in the future.
3. Avramopoulos meets with Ecumenical Patriarch Foreign minister Dimitris Avramopoulos met with Ecumenical Patriarch Vartholomeos on Monday night to seek his blessing and discuss the patriarch's thoughts on the success of the government. After the meeting Avramopoulos said "the Patriarchate, apart from its historical role, has contributed decisively to the shaping of a new environment in the wider region as well," adding that "the creation of an environment of stability, peace and friendship with the neighbouring people of Turkey was always in our priorities."
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