http://hat4uk.wordpress.com/2012/08/28/ecb-spain-stand-by-for-the-big-guns-barrage/
Draghi….cometh the hour….
ECB & SPAIN: Stand by for the big-guns barrage
ENTIRE ECB EXEC BOARD CRIES OFF JACKSON HOLE
Draghi….cometh the hour….
Swiss credit source tells The Slog: “We’re talking very, very big here: this is going to dwarf anything done for Greece, and it is going to make the bank 200% responsible for stopping the collapse”
The regions of Spain don’t come much more affluent than Catalonia. So the depth of Spain’s problem was made brutally clear this morning when the Catalans officially requested the full works – total bailout – hoping to apply for a cool €5.23 billion from Madrid. I understand that Mario Draghi knew about this last Friday, but it isn’t the only thing on his radar.
As The Slog posted two days back, Draghi has been playing a dangerous game of poker with Madrid; it now looks as if – unless he does something big, and soon – his bluff will be called bigtime. So much money was withdrawn from Spanish banks last month, the total overtook anything the EU has seen since Draghi’s ECB began collecting the data some fifteen years ago – before EMU was even a reality.
Although the markets seemed curiously calm in the light of these developments, my good source in the Madrid money markets was sanguine on the subject:
“Our view here is that either Draghi goes nap on solving the problem now, or the euro is history,” he told me, “so there’s no point in panicking just yet. If, however, he hasn’t moved by say Friday, well, people will get edgy. If he’d gone to Jackson Hole, we’d all have gotten very edgy.”
In fact, it turns out that the entire executive board of the ECB has cried off the Wyoming jolly. So something is very clearly afoot.
Eight days ago, Spain’s Minister for the Economy Luis de Guindos told news agency EFE that the ECB “must deploy unlimited bond buying” before too long. It’s pretty obvious that Supermario did that earlier today as the bond yields fell at the latest Spanish auction. But the expectation of serious firepower being applied to the debt issue is the overriding reason why the Central Bank’s Chairman personally ordered all exec members to stay in Europe “for at least the next ten days”.
A Swiss-based bank credit specialist I’ve known for some time now insists that it is bank viability, not bonds, that’s kept the EU’s central bankers chained to their Frankfurt desks.
“I think too many observers are underplaying the [Spanish] banking liquidity thing,” he said last night, “Draghi knows what to do and how to do it, but I think only in the last few days has he grasped the size and the inevitability. We’re talking very, very big here: this is going to dwarf anything done for Greece, and it is going to make the bank 200% responsible for stopping the collapse”.
My own view – having spoken to a range of commentators and traders in recent days – is that there comes a point at which bank liquidity and sovereign debt are inextricably linked – and I sense that the Calatonia request screams out that this point has been reached. Catalans produce 20% of the Spanish gdp, but a spokesman from the region said categorically that they “would not accept any political conditions for the aid” - a classic anti-Madrid emotion based in history, but also I suspect a swipe at the ECB in general, and Draghi’s poker face in recent times.
Too many regional and banking dominoes falling too quickly will make today’s bond purchases irrelevant. From here on, it’s about an irreversible decision from the Central Bank. And it’s abou the euro.
and rumors of a Spanish bailout - is this why Draghi passed on Jackson Hole very suddenly ????
Deposit flight from Spanish banks hits 15-year high as bailout rumours grow
Bank of Spain data showing sudden drop in amount on deposit comes as recession revealed to be deeper than thought
Email
Spanish banks lost €1 out of every €20 deposited with them in July, making it the worst month for deposit flight in 15 years as rumours grew that the country is edging closer to a full bailout.
News that banks were losing deposits came as Spain's statistics institute revealed the current recession is worse than thought, with the economy shrinking at an annual rate of 1.3% in the second quarter.
"The downturn in the Spanish economy is deeper than previously thought and accelerating," warned Robert O'Daly of the Economist Intelligence Unit.
Against this background, European Council president Herman Van Rompuy said it was up to Spain to decide whether to seek eurozone help, after meeting prime minister Mariano Rajoy in Madrid. Rajoy repeated that he needed more details from the European Central Bank to help him decide.
Tuesday's revised figures showed recession started three months earlier than previously indicated. "The data shows the recession started in the third quarter of last year," secretary for state for the economy, Fernando Jiménez admitted.
A collapse in internal consumption in a country squeezed by government austerity and massive unemployment is largely to blame for the recession, as this fell at an annual rate of 3.9% in the second quarter.
Unemployment is already at 25% but the speed at which jobs are being destroyed quickened to an average rate of 800,000 jobs a year in the second quarter, according to the statistics institute.
That helps explain why Spaniards, and their companies, are both reducing spending and putting less money in the bank.
Sources at the Bank of Spain claimed the sudden drop in the amount on deposit was mostly due to banks withdrawing money placed with other entities, but the fall came amid growing consumer anger with retail banks.
Tens of thousands of small savers are set to be hit with losses on preference shares they bought in former savings banks that now need bailing out by the eurozone's rescue fund.
Spanish banks can take up to €100bn (£79.7bn) from the fund, but preference shareholders must first bear losses of up to 80%. Many savers who bought the shares thought they were risk-free deposits from high street banks.
A new law due to be passed on Friday should settle their part of the bill for a banking crisis whose origins lie in the residential housing bubble that burst four years ago.
The new law should also set up a state "bad bank" to absorb toxic real estate – largely worthless building land and unsold new properties – that forced the nationalisation of several banks.
Attempts to stave off a full bailout took a blow on Tuesday when the regional government of Catalonia said it needed €5bn from a central government rescue fund.
Catalonia is one of half a dozen regional governments shut out of markets and needing government help to roll over debt and fund budget deficits. Regions have a combined debt of €145bn, with €36bn needing refinancing this year.
A report by the Fedea thinktank predicts Catalonia – which accounts for one fifth of the economy – will miss the 1.5% deficit target set this year, with an expected 2.5% deficit making it the second worst performing region.
Rajoy's conservative central government may eventually take direct control of the region's finances.
Regional prime minister Artur Mas, of the Catalan nationalist Convergence and Union coalition, has threatened a snap election if that happens. His spokesman, Francesc Homs, rejected any "political terms" for borrowing the money.
But as Spain pinned its hopes for avoiding a full bailout on future bond-buying by the European Central Bank, not all news was bad. On Tuesday it managed to borrow €3.6bn for three and six months at much lower rates than in recent auctions.
Exports continue to grow, while unit labour costs fell 2% – signs that a gradual internal devaluation may be happening.
Spain, meanwhile, has enjoyed a summer tourist boom, which generated 9% more income this July than a year earlier.
and.....
http://in.reuters.com/article/2012/08/28/idINWNA421420120828
TEXT-Fitch cuts 7 Italian mid-sized banks; affirms 2
(The following statement was released by the rating agency)
Aug 28 - Fitch Ratings has downgraded the Long-term Issuer Default Ratings
(IDR) of Banca Popolare di Sondrio (BPSondrio) and Banco di Desio e della
Brianza (BDB) to 'BBB+' from 'A-', and the Long-term IDR of Banca Popolare di
Milano (BPMilano) to 'BBB-' from 'BBB'. The agency has also downgraded the
Long-term IDRs of Banca Carige, Banca Popolare di Vicenza (BPVicenza), Credito
Valtellinese (CreVal) and Veneto Banca to 'BB+' from 'BBB'.
Simultaneously, Fitch has affirmed the Long-term IDRs of Banca Popolare
dell'Emilia Romagna (BPER) at 'BBB' and of Credito Emiliano (Credem) at 'BBB+'.
The Outlooks on all the banks' Long-term IDRs is Negative. A full list of rating
actions is at the end of this rating action commentary.
RATING ACTION RATIONALE AND RATING DRIVERS AND SENSITIVIES - IDRS AND VRS
The rating actions follow a periodic review of the nine banking groups. The
Negative Outlook on the banks' Long-term IDRs reflects the pressure arising from
the current challenges in the operating environment, where access to wholesale
funding has become more difficult and pressure on profitability remains high.
The VRs and therefore the IDRs of all the banks would come under pressure if
operating profitability deteriorated further or if the inflow of new impaired
loans materially rose for a prolonged period of time. Fitch currently expects
Italian GDP to contract by 1.9% in 2012 and to show zero growth in 2013. The
banks' ratings are also sensitive to material deterioration in funding and
liquidity.
The liquidity of the nine banking groups has come under pressure as funding
conditions have deteriorated materially since H211, and all banks have accessed
funding from the European Central Bank (ECB), albeit to different degrees. Fitch
considers the funding of some of the banks to be more reliant on institutional
funding than their peers, and wholesale maturities vary across banks, but the agency expects that the banks will all continue to concentrate on retail deposits and bonds issued to retail clients, as these are viewed as a more stable funding source. The agency currently expects that, although liquidity has tightened, all banks will maintain access to funding from the ECB as they have worked on increasing the availability of eligible assets for central bank refinancing operations. A material deterioration of access to the interbank markets and ECB liquidity would put significant pressure on ratings. For the banks' Outlooks to be revised to Stable and ratings to come under upward pressure, a material improvement in the operating environment, which would allow the banks to strengthen their operating profitability and reduce their large stocks of impaired loans, would be necessary. The key rating drivers and sensitivities for the IDRs and VRs of each bank (in addition to the rating drivers and sensitivities that are applicable to all nine banking groups) are: BANCA CARIGE Banca Carige's IDRs and VR have been downgraded because Fitch expects the bank's performance and asset quality to remain under pressure in the current operating environment. Banca Carige's fast growth in recent years has helped it to report adequate operating profitability, but Fitch expects loan impairment charges to increase in the weak operating environment. Banca Carige's ratings are based on Fitch's expectation that the bank will manage to strengthen its capitalisation, which currently is weak with a Fitch core capital ratio of 5.9% at end-June 2012. The bank plans to reorganise its group structure to benefit from tax benefits relating to goodwill write-downs. This should allow the bank to improve its regulatory core Tier 1 ratio to about 9% at end-2012, although Fitch considers this modest given the bank's weak asset quality. Banca Carige's VR and IDRs are sensitive to a further material deterioration in asset quality. The ratings would come under pressure if the bank did not manage to improve its capitalisation as planned or if profitability materially dropped. BPER BPER's VR and IDRs have been affirmed because Fitch considers the bank's operating performance, capitalisation and funding structure relatively resilient
in the current economic downturn. The bank's asset quality is weak with gross impaired loans equal to a high 11.7% of gross loans at end-2011, and will deteriorate further given the weak economic performance in Italy. However, BPER's pre-impairment operating profitability has remained adequate, and Fitch expects the bank to generate sufficient earnings to cover rising loan impairment charges. BPER's VR and IDRs are sensitive to a sharper than expected deterioration in asset quality as net impaired loans already account for a significant proportion of the bank's equity. The ratings would also come under pressure if the bank's ability to generate earnings deteriorated materially or if the bank failed to maintain its capitalisation. Meliorbanca's ratings reflect its full ownership by BPER and its integration with the parent bank. Although Fitch does not consider Meliorbanca a core subsidiary of BPER, it assigns the same IDRs based on support from its parent, as the agency believes that failure to support Meliorbanca would constitute significant reputational risk for BPER. In addition, the planned merger of Meliorbanca into the parent underpins the equalisation of Meliorbanca's IDR with that of its parent. Meliorbanca's IDRs are sensitive to changes in its parent's propensity to provide support, which Fitch currently does not expect, or to changes in BPER's IDRs . BPMILANO BPMilano's VR and Long-term IDR have been downgraded to reflect Fitch's expectations that the bank's weak performance and asset quality will remain under pressure in the current difficult operating environment. Fitch expects the bank to improve cost efficiency and to strengthen its operating performance under its new business plan, which was announced in July 2012. Improvements in performance are likely to be gradual, but the agency expects a speedy implementation of the bank's cost reduction measures. Fitch considers BPMilano's capitalisation acceptable as reported regulatory capital ratios are depressed by regulatory add-ons on risk-weighted assets. At end-March 2012, the bank's core Tier 1 ratio stood at 8.3%, but excluding the regulatory add-ons, the ratio would have been a stronger 10.3%. Regulatory capital, however, includes EUR500m hybrid instruments held by the Italian government, which the bank plans to repay in 2013. Fitch expects BPMilano's asset quality to deteriorate further in the current weak operating environment. However, the bank strengthened the coverage of impaired loans with loan impairment allowances in 2011, which should help to
mitigate the impact of further asset quality deterioration. The 'CCC' rating assigned to BPMilano's hybrid instruments and preferred stock has been affirmed. The rating reflects heightened non-performance risk for these instruments after the bank's announcement that coupon payments would only be made if the bank was contractually obliged to do so. BPMilano's VR and IDRs are sensitive to further material deterioration in asset quality or performance. Failure to implement the measures to improve the bank's cost efficiency and earnings generation would put pressure on the ratings, as would failure to meet its target capitalisation. Upward pressure on the bank's ratings would require a material improvement in operating profitability. BPSONDRIO BPSondrio's VR and Long-term IDR have been downgraded because Fitch considers that the current difficult operating environment has resulted in increased pressure on the bank's performance and asset quality. Fitch expects the bank to be more resilient than many of its peers, which underpins BPSondrio's VR, and Long-term IDR, at 'bbb+' and 'BBB+', respectively. BPSondrio currently benefits from sound asset quality, which deteriorated throughout the downturn but remains significantly better than the peer average. Fitch considers the bank's funding adequate. The bank receives its medium- and long-term funding predominantly from its customers, but it also accesses unsecured interbank and institutional funding. Liquidity risk related to this form of funding is mitigated by the bank's increased portfolio of unencumbered ECB-eligible assets. The bank's profitability has been more volatile than some of its peers, but this has in part been caused by valuation changes of its portfolio of Italian government bonds, a relatively large proportion of which is held in the trading portfolio. Fitch considers BPSondrio's capitalisation with a FCC ratio of 7.5% at end-2011 acceptable given the bank's relatively sound asset quality, but the agency considers this level of capitalisation lower than the capitalisation of similarly rated peers. BPSondrio's IDRs and VR are sensitive to a material deterioration in asset quality or operating profitability. BPVICENZA The downgrade of BPVicenza's IDRs and VR reflects Fitch's expectation that the bank will face challenges in improving its profitability, funding and capitalisation in the difficult operating environment. BPVicenza's operating
profitability remained weaker than most of its peers' in 2011, and higher loan impairment charges weighed on H112 operating profit. The bank has taken measures to reduce operating expenses and is concentrating on managing its asset quality, which has deteriorated. Fitch considers the coverage of the bank's impaired loans weaker than at some peers. The bank has managed to increase customer funding through term deposits gathering and the sale of bonds to its retail customers, and its loan/customer funding ratio (including deposits and bonds sold to retail clients) improved in H112. However, the bank will have to continue to rebalance its funding mix as its liquidity currently is underpinned by funding received from the ECB. BPVicenza plans to strengthen its capital ratios, which Fitch currently considers only just acceptable given the high level of impaired loans. The agency expects the bank to reach its target core Tier 1 capital ratio of 9% by end-2013. BPVicenza's VR and IDRs would come under pressure if the bank does not achieve its goal of rebalancing its funding mix by increasing retail deposits and bonds issued to retail clients while limiting loan growth. The ratings would also come under pressure if the bank does not manage to reach its target capitalisation. BDB BDB's VR and Long-term IDR have been downgraded because Fitch expects that the current difficult operating environment will result in increased pressure on the bank's performance and asset quality. In addition, the downgrade reflects Fitch's expectation that the bank's FY12 profitability will be depressed by one-off charges (around EUR42m) to cover the cost of the orderly liquidation of BDB's Swiss subsidiary. Fitch expects BDB's operating performance to remain more resilient than that of many of its peers, and notes that bank's funding is firmly based on retail deposits and bonds issued to customers through the bank's branch network; both of which underpin the bank's 'bbb+' VR and 'BBB+' Long-term IDR. . BDB's asset quality has deteriorated but remained sound, benefiting from its tight lending criteria, which have been in place for many years. Fitch expects asset quality to decline further, but less so than at many of its peers; combined with sound capitalisation, this means that Fitch expects the bank to perform better than most of its peers throughout the current market downturn. BDB appointed a new chief executive officer in 2012 after a Bank of Italy
inspection revealed some weaknesses related to information technology, organisation and regulatory controls. Fitch understands that controls have been strengthened. BDB has announced that it is closing down its Swiss subsidiary. BDB's IDRs and VR would come under pressure if further problems related to weaknesses in its internal control environment came to light, or if further losses related to these problems materialised. The ratings would also come under pressure if asset quality or operating profitability weakened substantially, both of which Fitch does not currently expect. CREDEM Credem's VR and IDRs have been affirmed because Fitch expects the bank's operations to remain more resilient than most of its peers' during the current economic downturn. Fitch considers the bank's operating profitability, asset quality and capitalisation adequate. The bank generated an operating return on equity of around 11% in 2011 and Q112, and its asset quality is sound, with gross impaired loans equal to a low 4.2% of gross loans at end-March 2012. Fitch expects asset quality to deteriorate somewhat given the weak economic environment in Italy, but the growth of impaired loans should remain easily manageable for the bank. Fitch considers the bank's Fitch core capital ratio of 8.8% at end-March 2012 adequate considering the relatively moderate level of net impaired loans. Credem's VR and IDRs are sensitive to a material deterioration in operating profitability and asset quality and to a deterioration in the bank's funding structure. Ratings would also come under pressure if the bank failed to maintain its capitalisation. CREVAL CreVal's IDRs and VR have been downgraded because Fitch expects that the bank's weak performance, asset quality and capitalisation will remain under pressure in the difficult operating environment. The bank's operating performance has remained under pressure as higher loan impairment charges have weighed on operating profit. CreVal's asset quality has suffered during the current economic downturn, and gross impaired loans were equal to a high 9.55% of gross loans at end-June 2012. Impairment allowance coverage of impaired loans has declined but remains at higher levels than that of many peers.
The bank's capitalisation improved after the conversion of a convertible bond to a Fitch core capital ratio of 6.6% at end-June 2012 from a weak 4.02% at end-2011, which was affected by negative valuation reserves on the bank's Italian government bond portfolio. CreVal expects to achieve a 7% Basel III common equity Tier 1 ratio by end-2012, including the effect of deducting negative revaluation reserves related to its Italian government bond portfolio. However, CreVal has not yet repaid hybrid capital issued to the government, which contributes about 95bp to its 8% regulatory core Tier 1 ratio at end-June 2012 (including the effect of the sale of its asset management subsidiaries). CreVal's VR and IDRs would come under pressure if asset quality deteriorated further or if the bank did not reach its target capitalisation. The ratings are also sensitive to a further deterioration in the bank's performance or funding structure. Credito Artigiano's IDRs are equalised with its parent's and reflect Fitch's view that Credito Artigiano, which operates as CreVal's distribution network in parts of Lombardy and other regions, is a core subsidiary of CreVal. CreVal announced that it will merge Credito Artigiano into the parent bank by end-August 2012, which underpins the integration of the subsidiary. VENETO BANCA Veneto Banca's IDRs and VR have been downgraded because Fitch expects the bank's performance and asset quality to remain under pressure in the current operating environment. Veneto Banca generated a 1.64% operating return on average equity (ROAE) in 2011 as loan impairment charges increased, and Fitch expects these to remain high given the weak performance of the domestic economy. The bank's asset quality has deteriorated, and gross impaired loans were equal to 8.35% of gross loans at end-2011. Fitch considers the coverage of the bank's impaired loans weaker than at some of its peers. Veneto Banca's Fitch core capital ratio of 5.9% at end-2011 was affected by negative valuation reserves on the bank's Italian bond portfolio, but Fitch expects the bank's capital ratios to improve significantly over the coming months. The bank concentrates on attracting retail funding to strengthen its liquidity further. Veneto Banca's VR and IDRs would come under pressure if the bank did not reach its target capitalisation, if asset quality deteriorated materially further than Fitch expects or if the bank's operating profitability did not stabilise at an adequate level.
RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR Fitch has affirmed the Support Ratings (SRs) and Support Rating Floors (SRFs) for all the banks at their current level. The SRs reflect Fitch's expectation of the probability that the authorities would provide support to the banks if needed. Fitch notes that the medium-sized banks have strong local franchises and have relatively large customer funding bases. Customer funding from retail clients also includes senior and, to a lesser extent, subordinated debt distributed through the banks' branch network. Fitch's assumptions for support are based on the expectation that in the current difficult market environment the propensity to support local banks remains high. The SRs of all banks subject to today's rating actions is '3', with the exception of BDB, whose '4' SR and 'B+' SRF reflects its ownership structure and its relatively small size. The SRs are sensitive to any change in assumptions around the propensity or ability of the Italian authorities to provide timely support to the banks. This might arise if the authorities became subject to external constraints to support all senior creditors of a bank, or if there was a change in the authorities' approach to supporting local banks, which Fitch currently does not expect. The Italian state's ability to provide such support is dependent upon its creditworthiness, reflected in its 'A-' Long-term rating with a Negative Outlook. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Subordinated debt and hybrid capital instruments issued by the banks are notched down from the issuers' VRs in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles, which vary considerably. The ratings of subordinated debt and hybrid securities are sensitive to any change in the banks' VRs or to changes in the banks' propensity to make coupon payments that are permitted but not compulsory under the instruments' documentation.The rating actions are as follows: Banca Carige Long-term IDR: downgraded to 'BB+' from 'BBB'; Outlook Negative Short-term IDR: downgraded to 'B' from 'F3' Viability Rating: downgraded to 'bb+' from 'bbb' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB' Senior unsecured notes: long-term rating downgraded to 'BB+' from 'BBB'; short-term rating downgraded to 'B' from 'F3' Subordinated notes: downgraded to 'BB' from 'BBB-' Banca Popolare dell'Emilia Romagna Long-term IDR: affirmed at 'BBB'; Outlook Negative Short-term IDR: affirmed at 'F3' Viability Rating: affirmed at 'bbb' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB+' Senior unsecured notes and EMTN programme: affirmed at 'BBB'/'F3' Subordinated notes: affirmed at 'BBB-' Meliorbanca Long-term IDR: affirmed at 'BBB'; Outlook Negative Short-term IDR: affirmed at 'F3' Support Rating: affirmed at '2' Senior unsecured debt: affirmed at 'BBB' Banca Popolare di Milano Long-term IDR: downgraded to 'BBB-' from 'BBB'; Outlook NegativeShort-term IDR: affirmed at 'F3' Viability Rating: downgraded to 'bbb-' from 'bbb' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB+' Senior unsecured notes and EMTN programme: long-term rating downgraded to 'BBB-' from 'BBB'; short-term rating affirmed at 'F3' Subordinated Lower Tier 2 debt: downgraded to BB+' from 'BBB-' Preferred stock and hybrid capital instruments: affirmed at 'CCC' Banca Popolare di Sondrio Long-term IDR: downgraded to 'BBB+' from 'A-'; Outlook Negative Short-term IDR: affirmed at 'F2' Viability Rating: downgraded to 'bbb+' from 'a-' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB' Banca Popolare di Vicenza Long-term IDR: downgraded to 'BB+' from 'BBB'; Outlook Negative Short-term IDR: downgraded to 'B' from 'F3' Viability Rating: downgraded to 'bb+' from 'bbb' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB' Senior unsecured notes and EMTN programme: long-term rating downgraded to 'BB+' from 'BBB'; short-term rating: downgraded to 'B' from 'F3'Market-linked senior notes: downgraded to 'BB+emr' from 'BBBemr' Subordinated Lower Tier 2 notes: downgraded to 'BB' from 'BBB-' Banco di Desio e della Brianza Long-term IDR: downgraded to 'BBB+' from 'A-'; Outlook Negative Short-term IDR: affirmed at 'F2' Viability Rating: downgraded to 'bbb+' from 'a-' Support Rating: affirmed at '4' Support Rating Floor: affirmed at 'B+' Credito Emiliano Long-term IDR: affirmed at 'BBB+'; Outlook Negative Short-term IDR: affirmed at 'F2' Viability Rating: affirmed at 'bbb+' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB' Senior unsecured notes and EMTN programme: affirmed at 'BBB+' Credito Valtellinese Long-term IDR: downgraded to 'BB+' from 'BBB'; Outlook Negative Short-term IDR: downgraded to 'B' from 'F3' Viability Rating: downgraded to 'bb+' from 'bbb' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB'Senior unsecured notes, including notes guaranteed by Credito Valtellinese, and EMTN programme: long-term rating downgraded to 'BB+' from 'BBB'; short-term rating: downgraded to 'B' from 'F3' Credito Artigiano Long-term IDR: downgraded to 'BB+' from 'BBB'; Outlook Negative Short-term IDR: downgraded to 'B' from 'F3' Support Rating: downgraded to '3' from '2' Veneto Banca Long-term IDR: downgraded to 'BB+' from 'BBB'; Outlook Negative Short-term IDR: downgraded to 'B' from 'F3' Viability Rating: downgraded to 'bb+' from 'bbb' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB' Senior unsecured notes and EMTN programme: long-term rating downgraded to 'BB+' from 'BBB'; short-term rating: downgraded to 'B' from 'F3' Subordinated Perpetual Tier 1 notes: downgraded to 'B' from 'BB-'and Lloyd's withdrawing from international mortgage lending ?????http://www.ftadviser.com/2012/08/28/ifa-industry/product-providers/lloyds-suspends-all-international-mortgage-lending-ckbaNSl3Y790JOMXDHCYVM/article.html
Lloyds Banking Group has suspended its international mortgage lending activities and has immediately stopped accepting applications and refused all active applications while it conducts a review of its lending operations, FTAdviser can reveal.A spokesperson for the bank confirmed to FTAdviser that it will refuse any applications which are already in process but not yet legally binding and has already stopped accepting applications pending the conclusion of a review, which is due to report by the end of the year.Prospective clients calling Lloyds to enquire about mortgages in the United States are being told the bank is experiencing “operational issues” and are not able to accept applications.*****http://globaleconomicanalysis.blogspot.com/2012/08/anti-eu-anti-brussels-sentiment-rises.htmlTuesday, August 28, 2012 1:17 PM
According to the polls, [Emile Roeme] the former elementary school teacher could become the next prime minister of the Netherlands. 'Over My Dead Body' Roemer owes this popularity to his skepticism about Europe. "Having even more Brussels is not the solution to Europe's crisis," he says. The Socialist rails against the European Commission's austerity targets, under which the Netherlands is supposed to reduce its budget deficit to below the Maastricht Treaty ceiling of 3 percent of GDP by next year. "Over my dead body," says Roemer, referring to the possibility of penalties being imposed by the European Commission. It is also a jibe at the German chancellor, who used similar language to express her views on introducing euro bonds. Too much power has been placed into the hands of uncontrollable technocrats, Roemer claims. "The economic policy Brussels wants to dictate to us is downright antisocial." If Roemer prevails in the parliamentary election on Sept. 12, German Chancellor Angela Merkel will lose one of the few supporters of her Europe-wide austerity program. The Dutch have stood with the Germans when it comes to imposing strict conditions on countries like Greece.Anti-EU, Anti-Brussels Sentiment Rises in Netherlands; Don't Expect Much From a "Merkollande" Summit
Emile Roeme, a socialist running on an anti-Brussels, anti-austerity plan is likely to become the next prime minister of the Netherlands. On the extreme right, populist Geert Wilders wants the Netherlands to withdraw from the eurozone completely. The centrists who support the nannyzone feel squeezed in the middle, and their days appear numbered. In a case of Dutch Discontent, Socialists Ride Wave of Anti-EU SentimentThe economy is in trouble and unemployment is rising -- in the Netherlands as in much of the rest of Europe. Ahead of upcoming elections, the Socialists are riding a wave of euro-skepticism and may emerge as the strongest political force in the country.Now the Socialist leader wants his fellow Dutchmen to vote in a referendum on the fiscal pact, one of Merkel's pet projects, which aims to impose budgetary discipline on the 25 signatory countries. The government in The Hague, which collapsed in April over a national austerity package, has not ratified the agreement yet. One Fewer Gold Star Right-wing populist Geert Wilders, who is known for his anti-Islam stance, is also fighting against Europe. He opposes the euro and wants the country to withdraw from the European Union. He even says that one of the 12 gold stars should be removed from the European flag if the Netherlands were to leave the EU. The left and the right in the Netherlands are coming at the traditionally pro-European centrist politicians from both sides. "It's like a horseshoe," says a senior EU official, talking about his home country. "The extremes are almost touching each other." The center-right Christian Democratic Appeal party (CDA) and the center-left Labor Party are being overtaken by populists on the left and the right. In a country that, like Germany, has particularly benefited from the common currency, champions of the euro have seen their numbers decline. "Some 60 to 70 percent of our income depends on exports to other European countries," says Mona Keijzer, a top Christian Democratic politician. But she too stresses that each country should address its own problems, and she roundly rejects any additional transfer of sovereignty to Europe. "We want to be a sovereign country," says Keijzer. "We are Dutch."First Sarkozy, Now Merkollande Former French president Nicolas Sarkozy and German chancellor Angela Merkel were uneasy allies in an effort to unite Europe. Sarkozy wanted eurobonds, an idea Merkel emphatically rejected at least 20 times. Hollande has now replaced Sarkozy, and the alliance would appear to be even more tenuous. Not only does Hollande want eurobonds, he also wants to rework some of the austerity measures insisted upon by Merkel. Thus it is amusing to see politicians who cannot see eye-to-eye on much of anything agree to work together on solution to eurozone crisis.Germany and France have moved on Monday to bury months of squabbling over how to resolve the euro crisis by agreeing to form a joint policymaking body to create a more integrated economic and fiscal policy in the eurozone and structure a new banking supervision regime. The German and French finance ministers, Wolfgang Schäuble and Pierre Moscovici, said the aim of the new working group was to produce common policies on how to deal with Greece, Spain and Italy. as well as mapping out longer-term strategies. The Germans hope this will conclude in a full-scale political union within the eurozone.Full-Scale Political Union? Really?OK, Hollande wants to save the euro too. Lovely. However, he does not want to cede power to Brussels. Consider this snip from the Wall Street Journal article France Shows Caution on EU Integration on July 8.As they debate over the pace of future political integration, Mr.Hollande and Ms. Merkel are expected to spar over whether time has come to appoint a euro-zone budget czar. German officials have called for giving the European Commission more powers to police national budget, and make sure profligate nations don't put the currency union at risk any more. France, fearing a loss of control over its national budget, has so far rejected that idea. Instead, Mr. Hollande wants to boost the status of the leader of the Eurogroup, the informal forum where the leaders and finance ministers of the countries that use the euro currency meet.How Long Can the Merkolande Alliance Last?My guess is not long given radically different viewpoints on how to get there from here. United States of Merkel Let's recap what I said yesterday, in Merkel Pushes Convention to Draft New EU Treaty; United States of Merkel? Do the German people want a centralized authority over budgets led by bureaucrats in Brussels or is is it primarily Merkel? I suggest the latter. Merkel wants as her legacy a United States of Merkel (which I define as a United States of Europe in which she gets primary credit for building). She does not care what it costs Germany as long as it gets her in the history books forever and a day. Numerous Problems The problems should be obvious. Many countries, especially the club-med states, do not want austerity or loss of sovereignty. They want printing. Also note that Holllande wants to continue his tax the rich policies while lowering the retirement age and preventing businesses from firing workers. Will Hollande's ideas work in a United States of Merkel? Let's assume they will work. Indeed that should be Germany's big fear. Put a bunch of nannycrats together and they are likely to decide anything. And whatever rules they decide will apply to every country in the nannyzone that foolishly signs the treaty. If the treaty is a simple majority rule treaty, Germany would be at risk of being overruled by the club-med states. If the treaty is by percentages, the club-med states would be at risk of being dominated by what is good for Germany and France (assuming of course Germany and France can agree). Do-or-Die Political Expediency Finally, politicians might want a nannyzone, but citizens of many countries would not, and I strongly suspect that includes Germany. Recall that France and Germany pushed through a treaty in December (still not ratified). Also recall that Hollande ran on a platform of renegotiating the treaty. Germany and France are still bickering. How's that supposed to work? Does Merkel think an agreement now is likely?I think not. Instead, her proposal is simply a matter of do-or-die political expediency and her one last chance to push for the United States of Merkel.Don't Expect Much (Except Bickering) From a "Merkollande"Summit While Hollande is skeptical at best, the Netherlands is downright anti-Brussels belligerent. So please tell me again how the Merkolande summit is supposed to work given the Netherlands, Germany, and France still not have ratified the last one, and numerous countries do not want to create a United States of Merkel led by nannycrats with budgetary veto powers. Mike "Mish" Shedlock
and......
http://www.brotherjohnf.com/
and...Greece is desperate to end its recession, now in its fifth year, and restore growth
telegraph.co.uk / By Louise Armitstead / August 28, 2012The Greek government said it is planning to launch Chinese-style “economic zones” with special tax and regulatory breaks in a desperate bid to attract foreign investment.Costis Hatzidakis, Greece’s development minister, said talks had already started with the European Commission on getting permission for the plan.The zones, which would specially designated areas of Athens and other key cities, that would have special tax breaks and administrative freedoms for companies to come and set up businesses. “We believe these zones will boost the real economy by creating a special regime to attract investment and generate exports,” Mr Hatzidakis told a press conference.Special economic zones have been a key driver of growth in China, Dubai and other emerging market economies where unfamiliar laws or thorny bureaucracies have dissuaded inward investors.However Greece’s plans could face legal difficulties due to the European Union free market rules. Mr Hatzidakis admitted that he had already encounted some issues. “There are already objections outside Greece because it (the zones) would give the country a comparative advantage,” he said.But he insisted the plans would be compliant with EU rules. “Current labour law will be fully respected,” he said.and some items from Greece.....Samaras and Stournaras identify budget cuts , and now they have to get Venizelos and Kouvelis to concur....
http://greece.greekreporter.com/2012/08/28/stournaras-government-has-identified-budget-cuts/
8 5 0 15The Greek government identified the measures to be included in 11.5 billion euros ($14.5 billion) of budget cuts in the next two years as demanded by its international creditors, Finance Minister Yannis Stournaras said. “We have settled on the package,” Stournaras said after a meeting with Prime Minister Antonis Samaras today. “Tonight’s meeting had to do with coordinating timetables and actions,” he said, according to a transcript of his comments e-mailed from Samaras’s office. Samaras will meet tomorrow with the leaders of the political parties supporting his coalition government, Evangelos Venizelos and Fotis Kouvelis, to discuss the package. Representatives of the so-called troika of the European Commission, International Monetary Fund and European Central Bank return to Athens next week to review the country’s progress in meeting the terms of its bailouts. (source: Bloomberg)
PM claims blow against 'drachma lobby'
Prime Minister Antonis Samaras indicated on Tuesday that the government was gaining some headway in its efforts to turn the debt-wracked country around as European Council President Herman Van Rompuy stressed that the country’s membership of the eurozone was “irreversible.” But despite the premier’s apparent confidence, criticism from the opposition and from within his fragile coalition suggested that finalizing a new raft of austerity measures demanded by Greece’s foreign creditors will be no easy task.
“I think the ship is beginning to turn around,” Samaras said before a meeting with President Karolos Papoulias, whom he briefed on talks with German Chancellor Angela Merkel and French President Francois Hollande in Berlin and Paris last week. “We are fighting to strengthen the country’s negotiating power,” Samaras said, adding that the chief aim of the government’s three coalition leaders was to secure the country’s recovery. He said a major victory had been won against those who oppose Greece’s recovery program -- an apparent dig at left-wing opposition SYRIZA, which came second in June elections on an anti-bailout platform. “The drachma lobby has lost an important round,” Samaras said.
The premier is due to meet on Wednesday with his coalition partners -- socialist PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis -- where talks are expected to focus on efforts to identify 11.5 billion euros in austerity measures before a scheduled visit to Athens next month by envoys of the European Commission, European Central Bank and the International Monetary Fund, known as the troika.
Samaras’s partners, who object to some of the proposed measures, including a proposed labor reserve scheme for civil servants, are unlikely to give the premier an easy time. In a speech to party MPs, Venizelos said PASOK supported the conservative-led government but noted, “We will not vote for whatever, nor have we abdicated to others the responsibility to take decisions for us.”
SYRIZA has pledged to fight the new austerity package in Parliament and “on the streets,” suggesting that heated protest rallies are in store next month.
It is unclear exactly what the new austerity package will entail. Sources said talks between Samaras and Finance Minister Yannis Stournaras on Tuesday focused not only on controversial proposals for more wage cuts for certain categories of civil servants such as military and judicial staff, but also on efforts to boost revenues and a stalled privatization program.
ekathimerini.com , Tuesday August 28, 2012 (22:49)
Special zone plan is under wayAthens to offer tax and labor relation incentives for investment in the country’s regions
By Dimitra Manifava
The government is paving the way for negotiations with the European Commission regarding the creation of special economic zones (SEZ) in Greece, Development Minister Costis Hatzidakis confirmed on Tuesday in Athens.
The ministry has already commissioned a feasibility study that will be submitted to Brussels along with a request for the creation of areas with a special tax and industrial relations status. Along with the changes to the investment incentives legislation and the fast-track law for investment licensing, this is seen as crucial for bolstering competitiveness and attracting investment.
“SEZ will give a boost to the basis of the real economy,” said Hatzidakis, reiterating that the existing labor legislation will be fully respected. However he avoided setting a timetable or clarifying whether the SEZ will have a geographical or thematic character, or a combination of the two, as is the case in the proposal by the Capital Markets Experts company for the creation of a silk zone at Soufli, near the border with Turkey at Evros.
The minister did say that the negotiations for the creation of the zones will be very difficult, as neighboring countries have raised objections regarding regions such as Evros.
This forms part of the 10-point priority plan Hatzidakis announced yesterday aimed at boosting growth. Changes to the investment incentives law and the fast-track regulations will be completed within the next 15 days. The bill to be prepared will include subsidies of up to 80 percent for smaller companies and larger tax exemptions for major enterprises.
Public-private partnerships will be used for bolstering regional growth. Hatzidakis announced that the first project for the utilization of local authority property will be auctioned in September: the ski resort at Tria-Pente Pigadia, near Naoussa in Macedonia.
Hatzidakis further announced initiatives for boosting innovation, ministry organization mergers and the transfer of agencies that will cut operational costs by a total of 30 percent.
ekathimerini.com , Tuesday August 28, 2012 (22:29)
Slow return of deposits
By Evgenia Tzortzi
Deposits in Greek banks posted a 2 percent rise in July, according to figures released on Tuesday by the European Central Bank, reversing the declining trend which was evident in May and June.
The creation of a coalition government in mid-June saw deposits grow by 3.2 billion euros in July, rising from 156.2 billion at the end of June to 159.4 billion at end-July. That growth is seen as rather small considering the outflow of 15.3 billion euros in May and June.
The total flight of deposits since July 2010 amounts to 58 billion euros, and almost 80 billion since 2009, which is equal to a third of the deposits that Greek banks held at the time.
ekathimerini.com , Tuesday August 28, 2012 (22:42)
Fires continue across Greece
ekathimerini.com , Tuesday August 28, 2012 (21:59)
Coalition chiefs to decide fate of special salaries
by Costas Papachlimintzos 28 Aug 2012
Reports suggest the government is considering a six-percent salary cut for the police and military (File photo)
The contentious issue of whether to cut the so-called special salaries enjoyed by about 195,000 civil servants is now in the hands of the leaders of the three coalition parties.Judges, diplomats, political appointees, state doctors, professors, the church hierarchy and the police and military enjoy the special salaries, which were supposed to be cut by 12 percent on July 1 under the terms of the second memorandum.After an inconclusive meeting on August 27 between Finance Minister Yannis Stournaras, Defence Minister Panos Panagiotopoulos and Public Order Minister Nikos Dendias on the issue, it is now up to coalition leaders Antonis Samaras, Evangelos Venizelos and Fotis Kouvelis to decide if and to what extent the special salaries will be cut.Cutting the special salaries by 12 percent would result in government savings of 100m euros this year alone.The special salaries account for one-third of all public-sector wage costs and were exempted from any cuts under the first memorandum agreement.According to reports, the government is considering the following cuts for special salary employees: six percent for the police and military, ten percent for university professors and doctors, and 20 percent for judges, diplomats and members of the Orthodox church hierarchy.
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