What started off as a sea of red, with S&P futures tumbling as much as -25 points ahead of the European open, on fears of trade wars and concerns about the surge in Italy's anti-establishment parties, has managed to rebound notable and stabilize, with most Asian and European markets now green. The dollar was steady and Treasuries gained, while Italian bonds dropped as the nation headed toward a hung parliament For those who missed it, Italian election results pointed to a hung parliament with anti-establishment 5-Star Movement as the largest single party and the Centre-Right seen as the leading coalition, with far-right junior coalition partner Northern League having possibly outperformed Berlusconi’s Forza Italia. Following the results, Italian League Head Salvini says the party is not available for bizarre coalitions, adding that the centre right coalition has won and can govern, adding that he is open to talks with all parties but rules out a broad coalition. Meanwhile, in Germany, Chancellor Angela Merkel is set to form her fourth government after the SPD voted in favour of another grand coalition. Merkel is set to be sworn in for her fourth term on 14th March. As BBG notes, the Italian election result and Germany’s move toward a coalition kick off a busy week for macro events. Both the Bank of Japan and European Central Bank will meet to decide on interest rate policy, while China hosts its National People’s Congress. Overshadowing it all, however, will be the next developments on global trade after U.S. President Donald Trump riled markets with his proposed tariffs last week. There’s a “lot of politics this week with Italy elections and NPC in China, also trade measures,” Frank Benzimra, head of Asia equity strategy at Societe Generale SA in Hong Kong, said. “The return of volatility we have seen since the end of January will probably remain.” On Monday morning, Europe's Stoxx 600 was up 0.6%, rebounding after closing in the red in the past four sessions, even as Italian stocks drop after a tremendous showing by anti-establishment groups in Sunday’s election, assuring a hung parliament and further chaos. Surprisingly, in a day many expected a European bloodbath, almost all Stoxx 600 industry groups rise; carmakers pare an earlier drop of 1.4% to trade little changed; the sector fell at the open after U.S. President Donald Trump upped the ante on import tariffs, threatening taxes on cars from Europe that “freely pour into the U.S.” Meanwhile, equity gauges from Tokyo to Sydney slumped during the Asian trading session amid worries about the implications of U.S. tariffs for the world’s economy. Italy’s stocks and bonds were the standout losers as Italy's FTSE MIB Index remained in the red, dropping around 1%, after paring an earlier drop of as much as 2%. Italian bonds, however, are slower to respond to this morning's relief rally, and at last check were trading north of 2%. As noted above, US index futures rebounded sharply from a much weaker open, and have declined only fractionally after a wave of buying was unleashed withe the European open. Shares in Shanghai bucked regional weakness as China kept its 2018 growth target of around 6.5 percent. Newly added stocks accounted for six out of 10 worst performers on Hang Seng China Enterprises Index, as the big-cap gauge extended losses after its worst month since January 2016. China Gas tumbles as much as 5.2% to lead declines on HSCEI, which slides 1.8%; China Mobile drops 3.3% to head for its weakest finish since April 2014; ZhongAn Online P&C Insurance and Cnooc dropped more than 3%. The stocks were weighed down by declines in the broad market, said Ken Chen, Shanghai-based analyst with KGI Securities. In macro, the yen initially gained, supported by populist parties’ surge in Italian elections, talk on trade wars and a BOJ looking toward the exit of its stimulus program; it strengthened as much as 0.4% to 105.35 per dollar, nearing a fresh 16-month high, before paring almost gains; Japan’s bonds advance as traders buy back after selling heavily last Friday following BOJ Governor Kuroda’s comments on monetary exit. Meanwhile, the euro took a hit after Tokyo fix as investors were unclear over Italy’s future political direction, but wasn’t knocked down, managing to rebound strongly above 1.23 handle. The Euro holds little changed after rising above the 21-DMA, while risk reversals for the pair gain in the front-end, with one-week remaining in negative territory ahead of the ECB policy decision on Thursday. The pound reversed an earlier drop after stronger-than- forecast U.K. PMIs The Bloomberg Dollar Spot Index is steady and the Treasury curve bull flattens. Bund futures rose and BTPs slipped from the open, while European equities outside Italy traded in the green. The dollar steadied even as Treasuries advanced. Elsewhere, China is reportedly seeking high level meetings with US in an effort to diffuse trade tensions and has asked for a list of US demands. Over the weekend, White House officials stated that President Trump plans to apply steel and aluminium tariffs globally and will not exempt allies such as Canada and Europe. In related news, EU's Juncker said on Friday the EU will respond to US steel action which may involve tariffs on motorcycles, while there were also source reports that EU duties of about USD 3.5bln are to be considered if the US goes ahead with its tariff plan. US President Trump also tweeted that the US could apply tax to cars from the EU. In the latest Brexit developments, the EU is reportedly set to uncover differences with the UK in draft Brexit guidelines with the proposals to be vague to force UK to explain what it is seeking, according to reports. Elsewhere, EU negotiators will this week offer a Canada-style trade deal putting pressure on Theresa May’s Brexit ‘red lines’. Further reports suggest, the European Commission is preparing to take a hard line over plans to “roll over” 50 EU free trade agreements during the Brexit transition period, in a threat to British exports. Looking ahead, highlights include US services PMI, ISM non-mfg PMI, Fed’s Quarles and Evans, as well as earnings from YY and Gibson Energy. Bulletin headline summary from RanSquawk Italian election results pointed to a hung parliament with anti-establishment 5-Star Movement as the largest single party White House officials stated that President Trump plans to apply steel and aluminium tariffs globally and will not exempt allies such as Canada and Europe Looking ahead, highlights include US services PMI, ISM non-mfg PMI, Fed’s Quarles and Evans Market Snapshot S&P 500 futures down 0.2% to 2,685.25 STOXX Europe 600 up 0.2% to 367.92 German 10Y yield fell 2.6 bps to 0.625% MSCI Asia Pacific down 1% to 172.68 MSCI Asia Pacific ex Japan down 1.2% to 564.41 Nikkei down 0.7% to 21,042.09 Topix down 0.8% to 1,694.79 Hang Seng Index down 2.3% to 29,886.39 Shanghai Composite up 0.07% to 3,256.93 Sensex down 0.9% to 33,754.18 Australia S&P/ASX 200 down 0.6% to 5,895.03 Kospi down 1.1% to 2,375.06 Euro up 0.02% to $1.2319 Italian 10Y yield rose 2.3 bps to 1.702% Spanish 10Y yield fell 3.2 bps to 1.518% Brent futures up 0.5% to $64.71/bbl U.S. Dollar Index little changed at 89.96 Top Overnight News from BBG Projections based on ballot-counting on Monday morning, following Italy’s vote on Sunday, suggested the two forces with the most gains, the euroskeptic Five Star Movement and the anti- migrant League, could reach a majority in at least one of the houses of the Rome-based parliament should they join forces China stepped up its push to curb financial risk, cutting its budget deficit target for the first time since 2012, to 2.6 percent of GDP from 3 percent, and setting a growth goal of around 6.5 percent that omitted last year’s aim for a faster pace if possible Chinese lawmakers will vote to appoint a new PBOC governor on March 19, according to a National People’s Congress agenda; while current bank regulatory chief Guo Shuqing and Hubei provincial party chief Jiang Chaoliang have both been tipped for the post, President Xi Jinping’s top economic policy adviser and Politburo member Liu He has recently been named by analysts in connection with the top monetary policy job and a vice premier position Trump administration shows scant sign of watering down its plan to impose stiff tariffs on steel and aluminum imports with carve-outs for specific countries, despite opposition from U.S. allies and Republican lawmakers. Tariffs would have “devastating effects on Europe, but also on the U.S. and the rest of the world,” EU Trade Commissioner Cecilia Malmstrom says to Swedish broadcaster SVT German Chancellor Angela Merkel says her government must begin its work “quickly” after Social Democrat vote to join coalition, citing global trade and competitiveness with China as urgent issues Asian equity markets began a risk-packed week with a downbeat tone as region digested Italian elections, China economic announcements and continued trade war concerns. This ongoing political uncertainty and rise of the Euro sceptics dampened the risk tone with ASX 200 (-0.6%) and Nikkei 225 (-0.7%) negative throughout the session, while Japanese steel names and automakers remained pressured on lingering tariff/trade war concerns. Elsewhere, Hang Seng (-2.3%) underperformed and Shanghai Comp. (+0.1%) bucked the trend as participants contemplated over China’s economic work report in which the official GDP growth target was maintained at 6.5% as widely expected, before disappointing Chinese Caixin Services and Composite PMI data. Finally, 10yr JGBs were higher and reclaimed the 151.00 level, amid a rebound in Tnotes and a flight-to-quality due to the subdued risk tone. Chinese Premier Li delivered the Economic Work Report at the NPC in which he announced that China maintained GDP growth target at about 6.5% this year but dropped reference to ‘higher if possible’. Premier Li further stated that China will keep prudent monetary policy neutral and maintain proactive fiscal policy, while China will also take further measures to lower tax burden for companies. Top Asian News China Turns Fiscal Screws While Targeting GDP Growth Around 6.5% China’s Top Tech Firms Heed the Call to Bring Listings Home Go-Jek Explores First IPO of a Billion-Dollar Indonesian Startup HSBC Is Said to Poach Morgan Stanley’s Top Indonesia Dealmaker Amidst the prospects of ongoing global ‘trade wars’ and the political uncertainty stemming from the Italian elections, European equities saw a pessimistic open following a similar tone in the Asia-Pac session. As of now, major bourses have pared back earlier losses (Eurostoxx 50 +0.3%) with the exception of FTSE MIB (-1.2%) as a clear underperformer. Financials lag with banks amongst the worst performers on the FTSE MIB with BPER Banca (-7.3%), Banco BPM (-6.2%), Ubi Banca (-4.6%) seen at the foot of the index dragged down by the Italian elections. The Berlusconi-controlled Mediaset (-5.4%) are also lower following projections showing the centre-right coalition fronted by the former PM falling short of an absolute majority. Following US President Trump’s latest threat to hike tariffs in EU auto imports, German auto names are underperforming with DAX 30 heavyweights BMW (-1.1%) and Daimler (-0.4%) seen lower. Top European News BMW May Have Most to Lose in Autos Trade War, Evercore Says U.K. Services Prop Up Economy on Better-Than-Forecast Growth Euro-Area Economy Looked a Little Less Buoyant in February May Secures Temporary Cease-Fire in U.K. Tory-Brexit Infighting Amid China M&A Drive, EU Rushes for Investment-Screening Deal In FX, the DXY has given up 90.000 status after last week’s roller-coaster ride when the index almost recovered to 91.000 before recoiling on US President Trump’s plans to slap import tariffs on steel and aluminium that sparked another wave of global trade war and protectionism jitters. However, a recovery in the EUR has moved EUR/USD back above 1.2300 and moved the DXY back into negative territory for the session. Meanwhile, Eur/Jpy initially breached strong technical support at 129.50 before reclaiming 130.00 amid the recent EUR strength. Elsewhere, the Nzd, Aud and Cad are G10 underperformers after Chinese PMI misses and a general risk-off tone on the Trump proposals and pledges of retaliation, with the Kiwi extending gains above 0.7200 vs the Greenback, Aud/Usd trading around 0.7750 and Usd/Cad just off fresh 2018 highs but back below 1.2900 and just shy of key resistance in the 1.2915-25 area. The Jpy and Chf are both benefiting from their safe-haven appeal, with the former around 105.50 vs the Usd (strong barriers still reported at 105.00) and the latter within a 0.9750-85 range vs its US counterpart. Cable at session highs above 1.3800 and Eur/Gbp still above 0.8900 between 0.8905-50 with Sterling continuing to be hampered by Brexit uncertainty amidst more reports about the EU’s hard-line stance on transition terms and conditions. In commodities, WTI and Brent crude futures traded higher despite the firmer USD as Libyan supply disruptions provide some reprieve after Libya’s Sharara oil field (largest in the nation) has halted pumping crude amid domestic protests. However, it was then later reported that production has resumed at the oil field. In terms of other energy newsflow, the IEA have upgraded their US oil output growth estimates by over 2mln bpd through 2023. Focus ahead will be on any comments from the meeting between OPEC and US shale producers as both sides look to address the ongoing global oil glut. In metals markets, gold prices remain modestly supported by the general risk tone with gains capped by the firmer USD. Elsewhere, Chinese steel futures were seen lower for a second consecutive session as demand in the region remains soft and despite China announcing that they will reduce around 30mln tonnes of steel capacity this year. Focus going forward will be on how Trump views/responds to threats made by the EU and Canada over counter-measures to last week’s tariff announcements. Politics should dominate the start to the week for markets. In China the National People’s Congress is due to begin in Beijing, with Premier Li due to present a draft of his work plan for 2018 (continues to March 20th). Away from politics, the main data releases on Monday will be the final February services and composite PMIs around the globe, along with Euro area retail sales for January, the Sentix investor confidence reading for March and the February ISM non-manufacturing in the US. Elsewhere BOJ Deputy Governor nominee's confirmation hearing will begin, while the Fed's Quarles is also due to speak. It's worth also highlighting that EU Council President Donald Tusk may circulate draft negotiating guidelines about the future relationship between the EU and UK on Monday. US Event Calendar 9:45am: Markit US Services PMI, est. 55.9, prior 55.9; Composite PMI, prior 55.9 10am: ISM Non-Manf. Composite, est. 59, prior 59.9 1:15pm: Fed’s Quarles Speaks on Foreign Bank Regulation DB's Jim Reid concludes the overnight wrap What’s the toughest business out there? After this weekend it’s definitely “snowbiz”. After a deluge of snow late Friday afternoon we made a big family snowman. By Saturday night after an incredibly quick melt it was as good as gone. I now know how mayflies feel. Through history snowmen have lived as precarious as an existence as Italian Governments and as we bring news of yesterday’s election it’s worth remembering that they have seen around 90 governments since the start of the twentieth century. Counting is still underway, but initial results suggest there is no clear majority with a hung parliament very likely, while the Five Star Movement will likely be the most popular single party with c32% share of the votes (up 6ppt vs. 2013 elections), as per RaiNews24, and better than final opinions polls suggested. RaiNews24 further notes that the Berlusconi led center-right coalition could achieve 35.5% of votes but still short of the 40% needed to avoid a hung parliament. However the League (c.16%) look set to beat Forza Italia (c.14%) which makes the centre-right look more anti immigration and euro sceptic. The center-left group led by Renzi could achieve c.23% of the votes. If the projections are true, it could lead to months of uncertainty until a coalition government could be formed. DB’s Mark Wall noted that an important lesson from the various political events over the last couple of years in the euro area is that unless there is a clear threat to euro area membership, there is little lasting impact on market sentiment. Further, it appeared all Euro sceptic parties had softened their stance on euro exit before the election. As long as the market remains convinced of this, he believes calmness should prevail. However for us there’s no doubting that populist parties have done better than expected and Italy is going to struggle to get a reforming agenda after these results. In contrast, in Germany the political stalemate has ended after the SPD voted in favour (66% to 34%) of forming a new coalition government with Ms Merkel’s bloc, paving the way for her to be re-inaugurated as Chancellor by mid-March. Mark believes the appearance of a post-Schaeuble pro-European policy stance by Germany is a buffer against the potential risks from Italy. This morning, the Euro initially strengthened on Germany’s developments but pared back gains to be marginally lower following news from Italy. In Asia, markets are broadly lower with the Nikkei (-0.71%), Kospi (-0.92%), Hang Seng (-1.26%) and China’s CSI 300 (-0.15%) all down as we type, while the UST 10y yield is down c2.5bp. Datawise, China’s February Caixin composite PMI (53.3 vs. 53.7 previous) and Japan’s Nikkei composite PMI (52.2 vs. 52.8 previous) were both softer than the prior month’s reading. Elsewhere, China has set an economic growth target of “around 6.5%” for 2018 but did not include the comment of “higher if possible in practice” as it did in 2017. Notably, the c6.5% target is in line with DB’s expectations. Looking forward it’s a big week ahead macro wise with the back end where most of the action will come. On Friday, 5 weeks on from the average hourly earnings shock that caused the vol quake, we’ll see the latest US payroll report with all focus on this month’s wages number. The consensus is for another strong +0.3% mom number in February however base effects mean that the YoY rate would hold at +2.8% (in line with DB) if that is the case. Before that we have the ECB meeting on Thursday and the BoJ on Friday. No change in policy is expected at either. For the ECB though, our economists expect the ECB to redefine the QE reaction function, reducing the likelihood that the ECB responds to economic and financial shocks with QE. The current forward guidance links the potential for an extension or expansion of QE to shocks to the economy and/or financial conditions. Our team expect the ECB to say that it will respond to shocks with the monetary policy stance more generally rather than QE specifically. By redefining the reaction function, this will set the ground for a June announcement that net asset purchases will end in December. The BoJ meeting should be a less exciting affair with the status quo maintained. Perhaps of most interest will be whether or not policy board member Goushi Kataoka officially puts forward his proposal for another easing. After we went to print on Friday Mr Kuroda caused a little bit of a stir though by suggesting that “Of course we will be considering and debating an exit [around fiscal year 2019].” This ends in March 2020 and is someway off but it’s a further sign that the bias for global QE continues to be for it to be wound down (for now). Also this week China's NPC starts today and continues through to March 20th with headlines already coming out as we discussed above. Our economists have also published a preview of the event which you can find here. For the rest of the week ahead see the day by day guide at the end. Watch out today for the final February services and composite PMIs released around the globe. The slowing Euro PMI manufacturing numbers of late have been a big market driver recently Of more unpredictable timing will be the next round in the latest trade rhetorics around the world after Thursday’s steel/aluminium tariffs announcement from the US President. Friday initially saw a big risk off/flight to quality when Mr Trump tweeted that “trade wars are good, and easy to win,”. EC President Juncker said Europe was prepared to respond forcefully to the developments by targeting imports of Harley-Davidson, Levi Strauss, and bourbon whiskey from the US. Mr Trump didn’t let this topic stay quiet and tweeted on Saturday that “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.” As the war of words was escalating, the European session was very weak on Friday before a US rally restored some stability into the market. The Stoxx 600 (-2.09%) and DAX (-2.27%) both fell the most since early February, while the FTSE was the relative outperformer (-1.47%). In the US, the S&P initially traded 1.1% down but closed 0.51% higher, in part as tech stocks rallied and investors seemed to have toned down the potential for a large scale trade war. Elsewhere, the Nadaq was up 1.08% while the Dow and the VIX (19.59) was down 0.29% and 12.8% respectively. Over in government bonds, UST 10y yields initially traded 1.6bp lower but weakened throughout the day to close 5.6bp higher to 2.865%, effectively reversing Thursday’s gains. Some suggests the weakness was amplified due to rate-lock selling ahead of this week’s large IG credit issuances but the swings said much about confusion as to whether protectionism is likely to cause riskoff (lower yields) or higher global prices (higher yields). Elsewhere, core European 10y bond yields were little changed and rose c1bp (Bunds and Gilts +0.7bp; OAT +1.1bp). Away from the markets and back onto President Trump’s tariff proposals. DB’s Brett Ryan believes the tariffs would have a negligible impact on the US trade deficit as imports of steel and aluminum account for 2% of all goods imports. On inflation, he believes the impact should be limited as cost increases are unlikely to be fully passed on to end customers. Overall, he believes it is the second order impacts of retaliatory measures undertaken by trading partners that could come with more substantial costs for the US and its trading partners further down the line. Our Chinese economists suggests the actual impact of the trade measures on China will also be relatively small - China exports only small shares of US steel (2%) and aluminum imports (11%). Further, with a senior advisor to President Xi (Liu He) visiting the US this week, they believe this indicates China is wanting to negotiate rather than retaliate (Link). Notably, this is consistent with comments by China’s Vice Foreign Minister Zhang over the weekend where he noted “China does not want to fight a trade war with the US, but we absolutely will not sit by and watch as China’s interest are damaged”. Over in the UK, on Friday the UK PM May reiterated that the UK intends to leave the Single market and Customs unions as well as impose an end to freedom of movement. However, DB’s Oliver Harvey believes there were shifts in tone, particularly to the importance of trade and services. Overall, he believes the EU will welcome the level of detail in her speech, but he is sceptical whether it can form the basis of negotiations on a future trade deal. Much will depend on the response of the EU leadership in the coming days. Refer to his note for more details. Finally on credit, Michal in my team has just published the monthly “IG Strategy: Issuance and Fund Flows” which provides commentary and data charts on the IG corporate bond market size, issuance and fund flows. This comprehensive report covers EUR, GBP and USD markets, including both DM and EM. It also puts both issuance and fund flows in the IG space into a broader global context. You can download the full report here. We wrap up with other data releases from Friday. In the US, the final reading for the February Uni. of Michigan’s consumer sentiment was revised up by 0.2pts to 99.7. In the details, both 1 and 5 year-ahead inflation expectations were unrevised at 2.7% and 2.5% respectively. Back in Europe, the Euro area’s January PPI was in line at 0.4% mom, but prior revisions means the annual rate was softer than expectations at 1.5% yoy (vs. 1.6%). The final reading for Italy’s 4Q GDP was unrevised at 0.3% qoq and 1.6% yoy. Elsewhere, Germany’s January retail sales was below market at -0.7% mom and 2.3% yoy (vs. 3% expected), although the prior annual reading was revised up by 1.7ppt. Politics should dominate the start to the week for markets. In China the National People’s Congress is due to begin in Beijing, with Premier Li due to present a draft of his work plan for 2018 (continues to March 20th). Away from politics, the main data releases on Monday will be the final February services and composite PMIs around the globe, along with Euro area retail sales for January, the Sentix investor confidence reading for March and the February ISM non-manufacturing in the US. Elsewhere BOJ Deputy Governor nominee's confirmation hearing will begin, while the Fed's Quarles is also due to speak. It's worth also highlighting that EU Council President Donald Tusk may circulate draft negotiating guidelines about the future relationship between the EU and UK on Monday.
Bailins Coming In EU - 114 Italian Banks Have NP Loans Exceeding Tangible Assets - Italy opposes ECB proposal that holds banks to firm deadlines for writing down bad loans- Italy's banks weighed down under €318bn of bad loans- New ECB rules could 'derail' any recovery in Italy's financial system- Draft proposal requires banks to provision fully for loans that turn sour from 2018- ECB insists banks have better access to collateral on delinquent debt to solve problem- Investors should secure assets as proposal suggests more bailins on horizon and banks remain at risk Source: ilsole24ore.com Another week and another unjustifiable move by the ECB to 'protect' the EU's banking system. This time it is the decision to toughen bad-loan rules for euro-area banks. The rules state that banks must be held to firm deadlines for writing down loans that turn sour. Banks will be required to provision fully for loans that turn sour from the start 2018. This is particularly bad news for Italy. The country has over €318 billion of bad loans. Should the banks be forced to dispose of these non-performing loans too quickly then a financial disaster could be triggered, derailing any form of recovery This is a step too far for Italy's bankers who argued the ECB had overstepped its supervisory role, instead enforcing measures that should only be enforced by lawmakers. Should they be enforced these new measures will not only put extra pressure on smaller banks but result in yet more savers and businesses losing money. The idea that these new policies will be beneficial for all is arguably laughable. Especially when one looks at the overall state of the Italian banking system. The Texan warning signal The health of a bank's non-performing loans (NPLs) can be measured using the Texas ratio. This is a measure of bad loans as a proportion of capital reserves. When the reading is over 100 it is a warning signal the banks need a solution quickly. Data cited in a March 2017 article shows that 23% of Italy's near 500 banks are showing signs of severe stress. 24 of the banks that have a Texas ratio reading of over 200. The bureaucrats in the likes of the ECB aren't worried about the majority of the Italian banks with a Texas ratio of over 100 as they are small local or regional savings banks with tens or hundreds of millions of euros in assets. But when a reading of over 100 basically means they don't have enough money to pay for the bad loans, what happens to the people who have their money with these small banks? This isn't just about those with money in small banks. The larger banks that often prop up the system are also in bad shape: Banco Popolare (the result of a merger between Banco Popolare di Verona e Novara and Banca Popolare Italiana in 2017 and then a subsequent merger with Banca Popolare di Milano on 1 January 2017): €120 billion in assets; TR: 217%. UBI Banca: €117 billion in assets; TR: 117% Banca Nazionale del Lavoro: €77 billion in assets; TR: 113% Banco Popolare Dell’ Emilia Romagna: €61 billion in assets; TR: 140% Banca Carige: €30 billion in assets; TR: 165% Unipol Banca: €11 billion in assets; TR: 380% i.e. with the exception of Unicredit (TR of 90%), Intesa Sao Paolo (TR of 90%) and Mediobanca all of Italy's major banks have TR ratios of over 100. As long as these banks continue to have worsening TR ratios then Italy's banking system has little hope of finding its feet again. In turn, this means more of Italy's savers, pensioners and businesses will suffer. If you want help, ransack savings first We all remember Cyprus in 2013. When savers went to their bank accounts to find their money gone thanks to ECB policy. Uproar was short-lived as the rest of Europe believed this wasn't something that could happen to them. They remained arrogant when the ECB brought in official bail-in policies, which would see savers impacted even more should a bank begin to fail. Sadly this is not something Italy can ignore. If anywhere has felt the brunt of the ECB's bank 'rescue' proposals then it is Italy that has been hit the hardest. Sadly it is set to happen time and time again. Already this year the EU has seen four bank 'rescues', three in Italy thanks to the NPL market: Monte dei Paschi, Banca Veneto and Vicenza Banca in Italy and Banco Popular in Spain. Each of them were crushed by the weight of NPLs on their balance sheets and insufficient capital to offset higher losses. Who suffered? Bank creditors, i.e. savers. Andrew Fraser, Head of Financial Research (Credit) at Standard Life Investments, explained: In each case, the outcome for subordinated bondholders was very negative, with falling prices reflecting the likelihood of zero recovery on an investment. “The failures have also raised questions as to whether there is sufficient clarity in the application of the regulatory rulebook. “The risk of owning bank debt has increased materially. Investors more than ever need to fully understand the risks embedded in a bank’s balance sheet but also the thickness of each layer of a bank’s capital structure which could absorb losses in the event of distress.” In order to 'help' the Italian banking system the ECB will no doubt end up doling out charitable lending (formally known as TLTRO II). But, banks don't qualify so easily for public financing, without the help of their generous customer first. Zerohedge explains: In order to qualify for public assistance, banks must be solvent. Presumably, that would automatically disqualify any bank with a Texas Ratio of over 150%, which includes MPS, Banco Popolare, Popolare di Vicenza, Veneto Banca, Banca Carige and Unipol Banca. The bailout must also comply with current EU regulations including the Bank Recovery and Resolution Directive of Jan 1, 2016, which specifically mandates that before public funds are injected into a bank, shareholders and creditors must be bailed in for a minimum amount of 8% of total liabilities, as famously happened in the rescue of Cyprus’ banking system in 2013. Savers suffer as banks fail As we have written about previously EU banking regulations do not protect those who need protection - savers, pensioners and businesses. It seems every few months there are new measures announced to further prop up the banking system. With each one is further punishment and risk for those with cash or investments in the banks. At the beginning of November we broke the news that new ECB proposals outlined plans to remove the deposit protection scheme. The news was little reported in the mainstream media, demonstrating the lack of concern readers currently have for the safety of their money. Italy has a lesson to teach us all, not about how to support a banking system but how to protect your savings from EU bureaucrats. Policies from the EU's legislators and bankers are created with one purpose in mind: keep the Eurozone afloat. To do this, they believe, individuals must make sacrifices through their savings, their pensions and even their homes. This does not mean that those with money and investments in the bank must take the same approach. For some ignorance is bliss, for others the deposit protection insurance is enough of a safety net. However depositors and investors should be aware of the policies when it comes to keeping their money safe in the banking system. Whilst bail-ins will at present only hurt those who hold deposits above EUR 100,000, there is little stopping the protected amount being decreased, or ignored altogether. The European Commission has forced all 28 countries to implement bail-in legislation, something anyone with exposure to an EU bank must be aware of. Consider the health of a particular bank and the risk exposure of their portfolio. This means diversifying your invesments and decreasing your own level of counterparty exposure. Protect your savings, not your bank Gold investment is seeing an uptick as a result of concerns surrounding counterparty risk. Gold investment saw a 15% climb in Q2 of 2016. Europe, in 2015, showed the largest regional demand for gold bars and coins (an increase of 12% year on year). Do not believe that any gold investment will protect you. Unallocated gold is as much exposed to counterparties as any other bank-based asset. Wealth of individuals and businesses can by protected by investing in allocated gold, held in segregated accounts. The buyer has legal ownership, with no counterparties to pop along after going bust and take what is legally theirs. Allocated gold held in segregated accounts cannot disappear overnight. Gold is the financial insurance against bail-ins, political mismanagement and overreaching government bodies. Related reading Bail-Ins In Italy? World’s Oldest Bank “Survival Rests On Savers” Protect Your Savings With Gold: ECB Propose End To Deposit Protection Invest In Gold To Defend Against Bail-ins News and Commentary Asia Stocks Mixed, Dollar Falls as Tax Boost Fades (Bloomberg.com) Dollar stalls as next step in US tax reform awaited (Reuters.com) Gold ends lower as tax-cut progress lifts U.S. dollar, stocks (MarketWatch.com) Gold ETFs Soar as Russia Probe Closes In on Trump’s Inner Circle (Bloomberg.com) U.S. Stock Rally Fizzles as Tech Drops, Oil Slumps (Bloomberg.com) Source: Bloomberg People have spent over $1 million buying virtual cats on ethereum blockchain (TechCrunch.com) Russia-China bond market play could start a dollarless financial system (RT.com`) World Gold Council plans another ETF (ETF.com) The War On Gold Intensifies: It Betrays The Elitists' Panic And Coming Defeat (ZeroHedge.com) The Pound is Enjoying a Fresh Wave of Confidence From Investors (Bloomberg.com) Gold Prices (LBMA AM) 05 Dec: USD 1,275.90, GBP 950.29 & EUR 1,075.71 per ounce04 Dec: USD 1,279.10, GBP 952.67 & EUR 1,079.43 per ounce01 Dec: USD 1,277.25, GBP 946.57 & EUR 1,072.51 per ounce30 Nov: USD 1,282.15, GBP 952.64 & EUR 1,084.06 per ounce29 Nov: USD 1,294.85, GBP 965.70 & EUR 1,092.46 per ounce28 Nov: USD 1,293.90, GBP 972.75 & EUR 1,088.95 per ounce27 Nov: USD 1,294.70, GBP 969.73 & EUR 1,084.83 per ounce Silver Prices (LBMA) 05 Dec: USD 16.29, GBP 12.14 & EUR 13.72 per ounce04 Dec: USD 16.33, GBP 12.09 & EUR 13.77 per ounce01 Dec: USD 16.42, GBP 12.16 & EUR 13.80 per ounce30 Nov: USD 16.57, GBP 12.32 & EUR 14.00 per ounce29 Nov: USD 16.90, GBP 12.60 & EUR 14.26 per ounce28 Nov: USD 17.07, GBP 12.84 & EUR 14.36 per ounce27 Nov: USD 17.10, GBP 12.81 & EUR 14.32 per ounce Recent Market Updates - Silver’s Positive Fundamentals Due To Strong Demand In Key Growth Industries- An Interview with GoldCore Founder, Mark O’Byrne- Risk Of Online Accounts Seen As One of Largest Brokerages In World Halts Online Trading After “Glitch”- Low Cost Gold In The Age Of QE, AI, Trump and War- Own Gold Bullion To “Support National Security” – Russian Central Bank- Bitcoin $10,000 – Huge Volatility of Cryptocurrencies and Risky Fiat Making Gold Attractive- Financial Advice from Dr Wayne Dyer- Buy Gold As Fed Shows Uncertainty And Concern Over Financial ‘Imbalances’- Brexit Budget – Grim Outlook As UK Economy Downgraded- Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust- Gold Versus Bitcoin: The Pro-Gold Argument Takes Shape- Money and Markets Infographic Shows Silver Most Undervalued Asset- Is New Fed Chief A “Swamp Critter Extraordinaire”? Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
В пятницу утром европейские акции колеблются вблизи флэтовой линии на фоне снижения уровня ликвидности в связи с праздником Дня Благодарения в США. Сводный европейский Stoxx 600 был около нуля с крупнейшими европейскими биржами, торгующимися в противоположных направлениях. Банковские акции стали лучшими исполнителями в середине утренней торговли после того, как СМИ сообщили, что Европа готовит более свободные правила в отношении отчуждения по проблемным кредитам. Итальянские банки BMP и Ubi Banca были отстранены от торговли после того, как их акции выросли более чем на 5 процентов. Акции компаний розничной торговли торговались немного выше в середине утренних сделок. Сектор находится под прицелом на фоне скидок в Black Friday, что может служить индикатором того, как розничные продавцы будут чувствовать себя в течение рождественского периода. Рассматривая отдельные акции, Provident восстановил некоторые из более ранних убытков после новостей о том, что его исполнительный председатель скончался. В целом на торговлю влияли низкие уровни ликвидности. В США рынки будут торговаться только половину дня из-за праздника. Что касается данных, индекс делового климата в Германии достиг новых рекордов. Доверие среди предпринимателей поднялось до рекордно высокого уровня в ноябре, несмотря на продолжающуюся политическую неопределенность. «Нынешняя ситуация в Германии является отличной иллюстрацией феномена, который характеризовал всю еврозону в течение года: энергичная уверенность и сильный экономический рост идут рука об руку с политической неопределенностью и нестабильностью», - сказал Карстен Бжески, главный экономист ING. «На наш взгляд, эта дихотомия может легко продолжиться в 2018 году, давая еще один сильный год для экономики Германии и еврозоны». Участники рынка отслеживают события в Ирландии и Германии в условиях политической неопределенности. В Дублине правительство кажется близким к краху после того, как появились призывы снять вице-премьера. В Берлине социал-демократы находятся под давлением, чтобы вступить в коалиционные переговоры с канцлером Ангелой Меркель и избежать новых выборов. В других новостях некоторые работники Amazon в Италии и Германии бастуют в пятницу, что может повлиять на розничную торговлю в Black Friday, сообщает Reuters. Кроме того, Unilever начал искать другого главного исполнительного директора, чтобы заменить Пола Полмана, сообщает Sky News. На текущий момент: FTSE 7411.79 -5.45 -0.07% DAX 13088.97 80.42 0.62% CAC 5416.57 37.03 0.69% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Европейские рынки были смешанными в среду, поскольку празднование Дня независимости в США сдерживало торговую активность в мире, и геополитическая напряженность продолжала накаляться. Общеевропейский индекс Stoxx 600 упал на 0,22 процента, при этом большинство секторов и крупных бирж торговались на смешанной территории. Нефть показала признаки движения к 50 долларам за баррель в среду после того, как исполнительный директор Международного энергетического агентства заявил, что ожидает, что мировые нефтяные рынки перебалансируются во второй половине 2017 года. Brent вырос на 0,2 процента до 49,71 доллара за баррель, а сырая нефть в США выросла на 0,13 процента до 47,11 доллара США. Сектор базовых ресурсов, который был самым успешным сектором в ранних сделках, вырос более чем на полпроцента после снижения в предыдущую сессию. Горнодобывающие гиганты Glencore, BHP Billiton, Anglo Amercian и Antofagasta лидировали, увеличившись более чем на 1 процент. Банки также поднялись в зону роста после того, как Европейская комиссия предоставила зеленый свет на спасение итальянского банка Monte dei Paschi di Siena в размере 5,4 млрд. евро ($ 6,1 млрд.) во вторник. В соответствии с соглашением общая сумма средств итальянских налогоплательщиков, размещенных в банке за последние несколько недель, составляет более 20 млрд. евро. Акции HSBC и Ubi Banca были среди тех, кто вырос в ранних сделках. Рассматривая отдельные акции, EDF изо всех сил пыталась оправиться от потерь во вторник после того, как объявила о перерасходе средств в размере 1,5 млрд. долл. США и о задержках в развитии ядерной энергетики в Хинкли-Пойнте в Великобритании. Между тем, британский онлайн-супермаркет Ocado поднялся выше, объявив об увеличении объемов заказов и выручки в первом полугодии. Его акции выросли на 1,7 процента в начале торгов. В среду инвесторы будут наблюдать за Ближним Востоком и, в частности, Катаром. Саудовская Аравия, Объединенные Арабские Эмираты, Египет и Бахрейн соберутся в среду, чтобы решить, следует ли продолжать санкции, которые они наложили на Катар по обвинениям в том, что он помогает терроризму и поддерживает регионального соперника Ирана. В преддверии решения Moody's понизило рейтинг Катара до «негативного». Рынки США вновь откроются в среду после выходного дня по случаю празднования Дня независимости 4 июля. Это происходит после того, как государственный секретарь Рекс Тиллерсон сказал, что дальняя ракета, запущенная Северной Кореей во вторник, указала на «новую эскалацию угрозы» режима президента Ким Чен Юна и призвала к глобальным действиям. На текущий момент FTSE 7348.83 -8.40 -0.11% DAX 12442.62 5.49 0.04% CAC 5177.44 2.54 0.05% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Two weeks after the first, and biggest, European bank bail-in took place under the relatively new European bank resolution mechanism, the EBRD, when Spain's Banco Popular wiped out the holders of its most risky securities, including equity and AT bonds, and then selling what was left of the bank to Santander for €1 - a process that took place without a glitch - Italy may have just killed any hope of a European banking union, when the bailout of two small banks made a "mockery" of Europe's new regulation. Late on Sunday, Italy passed a decree that will effectively sell the good part of the two banks to Intesa, Italy’s second-largest and best-capitalized bank. Intesa said last week that it would be willing to buy the best assets for a token price of €1 as long as the government assumed responsibility for liquidating the banks’ large portfolio of sour loans. As a result, Italy said it would commit as much as €17 billion in taxpayer funds to clean up the two failed "Veneto" banks in one of Italy's wealthiest regions and support the takeover of their good assets by Intesa Sanpaolo SpA for a token amount. After an emergency cabinet meeting on Sunday, Finance Minister Pier Carlo Padoan said the Italian government will provide Milan-based Intesa with about €5.2 billion euros to allow it to take on Banca Popolare di Vicenza SpA and Veneto Banca SpA assets without hurting capital ratios, The European Commission, in a separate statement, said it approved the plan for the two banks and that it is in-line with state-aid rules. Unlike the Banco Popular bail-in by Santander, however, Intesa would only take on the good assets. PM Gentiloni said the lenders will be split into good and bad banks and that the firms, with taxpayers on the hook for the bad banks. The process was rushed to allow the failed banks to reopen on Monday and avoid a depositor panic and bank run. The intervention is necessary because depositors and savers were at risk, Gentiloni said. The northern region where they operate “is one of the most important for our economy, above all for small- and medium-size businesses.” In addition to the €5.2bn handed to Intesa, an additional €12bn will be available to cover potential further losses at the bad banks, Padoan said, while the Italian Treasury estimates the fair value of the losses at about €400 million. The final number will be far greater. Just like in the case of Banco Popular, the government tried for months to find a way to keep the banks afloat, including an appeal to wealthy businessmen in the region to contribute to a rescue according to Bloomberg. Those efforts ended on Friday when the European Central Bank said the two banks are failing or were likely to fail and turned the matter over to the Single Resolution Board in Brussels for disposal. The SRB, in turn, passed the issue back to Italian authorities to allow the banks to be wound down under local law. In the subsequent 48 hours, culminating with today's announcement by the prime minister, which also required a change to Italy's bankruptcy law, Italy rushed to assemble the measures to carry out the plan because a local regulatory framework was required to allow the banks to open on Monday. Ultimately, the plan unveiled by the government is virtually the same as that suggested earlier in the week by Intesa, which "offered" to take on the assets of the two Veneto banks on the condition that it wouldn’t harm its own capital and dividends, in some ways mirroring an FDIC-backed bailout of a US bank, in which a safe lender assumes all the deposits and loans, which the insurer plugs the capital shortfall. Only in this case, the NPLs are spun off into a separate entity: Intesa's proposal excluded soured debt, higher-risk performing loans and subordinated bonds, along with shareholdings and other “legal relationships.” A purchase would only move forward if it didn’t lower Intesa’s common equity Tier 1 ratio, the bank said. But where the rest of Europe will be infurated, is that unlike the recent bail-in of Popular in which billions in unsecured liabilities were wiped out, in the case of the Veneto banks the proposed bail out ensures that senior creditors and depositors of Popolare di Vicenza and Veneto Banca would be protected in the wind-down under national insolvency law, and customers would see no interruption in service. Retail junior bondholders involved in the burden sharing - who can be reimbursed up to 80 percent according to rules - will be totally refunded because Intesa said it can fill the gap. And, as the WSJ adds, "the decision over the weekend to spare two failed Italian lenders from the full force of those new rules raises questions about the effectiveness of the banking union." * * * Some background: The decision to create a banking union was the decisive moment in the eurozone's response to the global financial crisis. The establishment of common banking rules and oversight institutions were intended to help restore trust in a system badly shaken by concerns that weak national supervisors in thrall to local political pressures were colluding to hide from investors the full scale of bad debts. It also formed the centerpiece of a grand political bargain: By committing to sever the link between weak banks and over-indebted sovereigns, governments prepared the way for European Central Bank president Mario Draghi's 2012 promise to do "whatever it takes" to save the eurozone, including buying government bonds. The centerpiece of the new regime was the Bank Resolution and Recovery Directive -- rules to ensure that no taxpayer money is used to bail out banks and that losses fall on private-sector creditors -- and the creation of the Single Resolution Board to oversee the process. There was relief last month when this new regime was tested for the first time by the failure of the Spanish lender Banco Popular, which was sold to Santander for one euro after its shareholders and junior bondholders had been wiped out, with no adverse effect on the market. But Veneto Banca and Banco Populare di Vincenza will be spared the same treatment. Using a loophole in the BRRD, the Single Resolution Board has ruled that the two banks are not systemically important and therefore can be liquidated under Italian insolvency rules, which permit the use of government cash without the need for senior bondholders to take losses. As noted above, the plan is that the good assets of the banks will be transferred to Intesa Sanpaulo for a euro, but the bad assets and the cost of redundancies will be left with the government, which faces losses of up to €10 billion. * * * As the WSJ's Deborah Ball observes, the case of the Veneto banks is yet another example of Italy wriggling out of strict EU rules built after the financial crisis to prevent taxpayers from footing the bill in the event of the collapse of such institutions as banks. When the EU authority in charge of winding down the bloc’s failing banks—the Single Resolution Board—decided it wouldn’t take the case, it handed all power over to Italian authorities. This was followed by a Friday announcement by the SRB that it wouldn’t take action because neither of the banks would have “a significant adverse impact on financial stability" which is ironic becauase the whole point of the bailout - and not bial in - is to avoid a bankrun at the two banks which could then spread to the rest of the Italy's banking system. So the two banks will be closed down under national insolvency procedures, and the painful process of EU bail-in—under which junior and senior bondholders absorb the losses—is averted. In Italy, a majority of bonds are in the hands of mom and pop investors. Ironically, the EU Commission which pushed hard for the BRRD insists this is not a loophole and that the possibility of using national as opposed to eurozone-level insolvency regimes was clearly envisaged under the Bank Resolution and Recovery Directive. It points out that a number of failed banks have been liquidated using national insolvency regimes since 2015. * * * Even so, the WSJ notes that this decision has taken most observers by surprise. The two Italian banks, though smaller than Banco Popular, were large enough to be supervised by the European Central Bank. It therefore was widely assumed that their resolution would also be handled at the European level. Instead, it now appears that the SRB has discretion as to whether to apply the BRRD rules. Meanwhile the eurozone finds itself in the paradoxical situation where systemically unimportant banks are eligible for state aid, while systemically important banks must be subject to full bail-in. And, as the WSJ correctly adds, it is hard to avoid the conclusion that the SRB's decision to spare senior bondholders in the two lenders is primarily political. Adding insult to injury, and even more questions about whether the BRRD is even relevant any more, back in March Italian authorities tried in March to use another exception in EU rules to prop up the two Veneto banks. Under so-called precautionary recapitalization, Italy could have injected state money into the ailing lenders, but the commission didn’t approve the plans. More from the WSJ: The Italian authorities have been fighting a rear-guard action to save the two banks from insolvency for two years, not least because they are major employers in the region and because many of the bondholders are retail customers of the banks who may not have known of the risks they were taking when they bought what were marketed as high interest savings products. Liquidating the banks under national rules at least removes the risk that 300, 000 retail investors might be hit by substantial losses less than a year before a general election is due. No one wants to reignite a new political crisis in the eurozone just as the economy, including that of Italy, appears to have finally turned a corner. Maybe, but Berlin, Europea's paymaster who had pushed hard for a uniform bank resolution mechanism and now finds Italian banks abusing one after another loophole to get bailed out instead of in, is not happy. Speaking to Germany's Die Welt, Isabel Schnabel, a member of Germany’s Council of Economic Experts said that the wind-down of Italy’s Veneto Banca and Banca Popolare de Vicenza under national insolvency law is “a serious blow to the European settlement regime." and added that "the cases show that European settlement regime offers too many loopholes" as in the end bank senior creditors will be completely spared from losses while Italian taxpayers will foot the bill. According to Scnabel, the Single Resolution Board’s authority should be expanded to include smaller banks in order to avoid situations where “creditors of banks are being spared from losses according to the convenience of the host countries.” For now, however it is too late, and Rome has once again outsmarted Berlin. * * * So with yet another gross evasion of Europe's bank resolution mechanism, where does that lead the banking union? As WSJ writes, "the decision to put the liquidation into the hands of the Italian authorities is not being questioned by Germany. From Berlin's perspective, it is enough that it has headed off a long-standing attempt by Rome to try to keep the banks alive by injecting government capital using another controversial BRRD loophole known as precautionary recapitalization." The decision to spare senior bondholders represents a pragmatic compromise to a saga that has cast a shadow on the Italian and eurozone banking system for too long -- and which German officials believe should have been addressed years ago. Nonetheless, Berlin wants reassurance that this deal doesn't set a precedent and that the state aid rules will be rigorously applied to minimize the use of taxpayers' money, according to German officials. In recent weeks, there has been much speculation about a fresh political push to strengthen the eurozone, including the creation of new mechanisms to pool banking risks via a common backstop to the eurozone's Single Resolution Fund and a common deposit-insurance scheme. But the Italian episode highlights that before any steps can be taken to complete the banking union, new measures may be needed to strengthen the rules already in place. A much more harsh assessment was offered earlier over the weekend by Bloomberg commentator Ferdinando Giugliano who wrote that as a result of today's bailout, "Europe's Banking Union Is Dying in Italy"and that "Italy's plan to rescue two small banks makes a mockery of Europe's new regulations." This plan is a slap in the face of Italian taxpayers, who according to some estimates could end up paying around 10 billion euros ($11.1) for it. The government could have taken a less expensive route, involving the "bail in" of senior bondholders. It chose not to: Many of these instruments are in the hands of retail investors, who bought them without being fully aware of the risks involved. The government wants to avoid a political backlash and the risk of contagion spreading across the system. However, 10 billion euros is a whale of a premium to pay as an insurance against a contagion. And Rome may still face a backlash -- from taxpayers who will feel defrauded. Most importantly, this plan is a dagger in the heart of the euro zone banking union. This was one of Europe's main responses to the sovereign debt crisis, designed to limit the contribution of taxpayers to bank rescues and to ensure all euro zone lenders faced a coherent set of rules.... This means the European Commission must take a hard look at it and decide whether it really fits within existing laws. Intesa Sanpaolo is cherry-picking the assets it wants and leaving the bill to the government: It's hard to see how this doesn't involve state aid, which the EU forbids. Ultimately, however, as the WSJ notes the decision to bail out the two banks and their stakeholders was entirely political (involving fears over a popular backlash of impaired senior bondholders), which means that Italy's government will continue bailing out those exposed to bank risk as long as Italy's taxpayers - and voters - keep silent; after all the risks from the alternative: depositors runs, contagion, bank crisis, are just too high and could remind Europe that 7 years after the first Greek bailout, absolutely nothing has been fixed in Europe, where the artificial sense of calm is only at the behest of a European central bank which now owns a record €4.2 trillion in assets and rising every week.
Authored by Wolf Richter via WolfStreet.com, ECB shuts down Veneto Banca and Banca Popolare di Vicenza. When banks fail and regulators decide to liquidate them, it happens on Friday evening so that there is a weekend to clean up the mess. And this is what happened in Italy – with two banks! It’s over for the two banks that have been prominent zombies in the Italian banking crisis: Veneto Banca and Banca Popolare di Vicenza, in northeastern Italy. The banks have combined assets of €60 billion, a good part of which are toxic and no one wanted to touch them. They already received a bailout but more would have been required, and given the uncertainty and the messiness of their books, nothing was forthcoming, and the ECB which regulates them lost its patience. In a tersely worded statement, the ECB’s office of Banking Supervision ordered the banks to be wound up because they “were failing or likely to fail as the two banks repeatedly breached supervisory capital requirements.” “Failing or likely to fail” is the key phrase that banking supervisors use for banks that “should be put in resolution or wound up under normal insolvency proceedings,” the statement said. This is the first Italian bank liquidation under Europe’s new Single Resolution Mechanism Regulation. The ECB explained: The ECB had given the banks time to present capital plans, but the banks had been unable to offer credible solutions going forward. Consequently, the ECB deemed that both banks were failing or likely to fail and duly informed the Single Resolution Board (SRB), which concluded that the conditions for a resolution action in relation to the two banks had not been met. The banks will be wound up under Italian insolvency procedures. And the ECB provides a little history of its failed efforts to put these banks on the right track: ECB Banking Supervision has closely monitored the two banks since capital shortfalls were identified by the comprehensive assessment in 2014. Since then, the two banks have struggled to overcome high levels of non-performing loans and underlying challenges to their business models, which resulted in further deterioration of their financial position. In 2016, the Atlante fund [Italy’s government-sponsored “bad bank” set up in Luxembourg to take toxic assets off Italian banks books] invested approximately €3.5 billion in Veneto Banca and Banca Popolare di Vicenza. However, the financial position of the two banks deteriorated further in 2017. The ECB had therefore asked the banks to provide a capital plan to ensure compliance with capital requirements. Both banks presented business plans which were deemed not to be credible by the ECB. So nothing worked. Private sector money stayed away in droves. JP Morgan, which had been recruited to save the Italian banks, threw in the towel. These banks had been zombies for too long. Everybody knew it. But the government kept denying it. Just weeks ago, Italy’s Minister of Economy Pier Carlo Padoan insisted that the two banks would not be wound down. Last year, to dispel the mountain of evidence to the contrary, he insisted that that there would be no need of any future bail outs; and that, furthermore, Italy did not even have a banking problem. In early June, the two banks were instructed by the European Commission to raise an additional €1.25 billion in private capital. No one bit. Italy’s government then tried to persuade the European Commission and the ECB to water down the requirement to €600-800 million, and it urged Italian banks to chip in to the bank rescue fund. All that failed. So this weekend, the Italian government gets to sit down together for a friendly chat to enact the necessary measures to protect depositors and senior bondholders in those two banks. Stockholders will be crushed. Junior bondholders will likely get slammed hard. And the Italian taxpayer might face some additional pain – all of it caused by many years of terrible and reckless bank management. The saga of the long-festering banking crisis has thus moved on to the next chapter. A new era has begun in Europe. And it started in Spain. Many Banco Popular investors were wiped out. Taxpayers are off the hook. Read… “Bail-In” Era for Europe’s Banking Crisis Begins
Рынки в Европе снизились в понедельник, так как инвесторы с осторожностью оценивали ситуацию с подвешенным парламентом в Великобритании и ожидали встречи Федрезерва на этой неделе. Общеевропейский индекс Stoxx 600 упал на 0,18 процента, при этом большинство секторов и крупных бирж переместились на отрицательную территорию. Акции технологического сектора были самым провальным сектором на ранних торгах, упав более чем на 2 процента. Индекс Nasdaq достиг рекордного максимума на открытии в пятницу и упал на закрытии на 1,8 процента. Акции Apple, Facebook, Amazon, Netflix и владельца Google Alphabet упали более чем на 3 процента. Акции сектора базовых ресурсов упали на 1 процент после решения ЕС в пятницу установить пошлины до 35,9 процента на импорт горячекатаной листовой стали из Китая, чтобы противостоять тому, что, по его словам, являются несправедливыми субсидиями. С другой стороны, акции сектора нефти и газа немного выросли после глубоких потерь на прошлой неделе. В корпоративном мире генеральный директор Unicredit Жан Пьер Мустье сказал, что он уверен, что отечественные банки помогут двум проблемным банкам базирующихся в Венето. Акции итальянских банков выросли в понедельник утром с Ubi Banca в верхней части индекса. Последний наметил увеличение капитала до 27 июня. Во Франции председатель Orange Стефан Ричард заявил, что французский телекоммуникационный рынок вряд ли увидит слияние четырех операторов мобильной связи в ближайшем будущем. Новый британский кабинет намерен провести свое первое заседание в этот понедельник после того, как премьер-министр Тереза Мэй была переизбрана с правительством меньшинства. С ослабленной позицией она вновь назначила большую часть своих министров в воскресенье. Сообщения в СМИ показывают, что новое правительство может принять мягкий Brexit, чтобы удержать Великобританию на едином рынке, несмотря на предыдущие заявления и цели лидера консерваторов. Между тем в Италии популистское «Пятизвездное движение», похоже, сильно пострадало на местных выборах в воскресенье, тогда как во Франции партия независимого президента Эммануэля Макрона должна получить огромное большинство на парламентских выборах, преследуя традиционные партии. На Ближнем Востоке Катар заявил, что готов выслушать озабоченность других арабских государств после того, как они прервали дипломатические и экономические связи. На текущий момент FTSE 7504.24 -23.09 -0.31% DAX 12689.92 -125.80 -0.98% CAC 5241.00 -58.71 -1.11% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Рынки в Европе выросли в пятницу утром, когда инвесторы отреагировали на зависший парламент в ходе всеобщих выборов в Великобритании. Общеевропейский индекс Stoxx 600 вырос на 0,24 процента, а FTSE 100 вырос на 1,17 процента в начале торгов. Лондонский индекс был поддержан падением фунта стерлингов и роста доходов многих крупных конгломератов, индексированных в долларах США. Фунт упал более чем на 2 процента по отношению к доллару, составив 1,2682 доллара, после того, как выборы удивили опрошенных и аналитиков подвешенным парламентом. Премьер-министр Тереза Мэй назначила выборы, чтобы усилить свое присутствие в парламенте, и добиться более сильной позиции в Брюсселе, но ее руководство в настоящее время подвергается сомнению. Она должна выступить в прессе в 10 утра по Лондонскому времени. Лейбористский оппонент Джереми Корбин сказал, что премьер-министр должна уйти в отставку, а бывший министр финансов и член консервативной партии Джордж Осборн сказал, что Мэй может столкнуться с «огромным посмертным моментом» своей избирательной кампании на всеобщих выборах. Политическая неопределенность отправила крупнейших строителей жилья и производителей строительных материалов в нижнюю часть европейского индекса. Акции и упали более чем на 4 процента в ранних сделках, котировки Travis Perkins и Taylor Wimpey упали более чем на 3 процента. Инвесторы обеспокоены тем, что решения о покупке домов могут быть пересмотрены. Другие компании, зарегистрированные в Великобритании, такие как Sainsbury's, Next и Marks and Spencer, также потеряли часть своей капитализации, опасаясь, что политическая нестабильность может нанести ущерб потребительским настроениям и покупательной способности. На данный момент есть также сомнения относительно сроков переговоров Brexit. Подвешенное парламентское голосование указывает, что переговоры, которые должны были начаться 19 июня, скорее всего, будут отложены. Крупнейший поставщик энергии в Великобритании поднялся на вершину европейского индекса после продажи 60-процентной доли в канадской разведке нефти и газа. Акции выросли на 3,5 процента. Ранее на сессии акции Ubi Banca были сняты с торгов после их роста на 6,5 процента. Акции, похоже, были поддержаны повышением рейтинга от местной брокерской компании Equita. На текущий момент FTSE 7508.82 58.84 0.79% DAX 12773.08 59.50 0.47% CAC 5291.44 27.20 0.52% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Европейские рынки были смешаны в среду утром, так как политическая неопределенность вновь стала в центре внимания. Общеевропейский индекс Stoxx 600 незначительно снизился на 0,1 процента, при этом большинство секторов торговались в минусе. Акции сектора базовых ресурсов упали больше всего в утренних сделках, но крупные биржи торговались в разных направлениях. В среду FTSE 100 вырос на 0,3 процента, поскольку фунт стерлингов снизился по политическим соображениям. Опрос YouGov показал в конце вторника, что премьер-министр Великобритании Тереза Мэй может не выиграть общее большинство на всеобщих выборах на следующей неделе. Она решила выступить с намеченными выборами, чтобы укрепить свою парламентскую позицию и иметь больше возможностей для переговоров по Брекзиту с ЕС, но ее отставание от лейбористской партии в последние несколько дней значительно сократилось. Worldpay Group была одной из наихудших компаний в рейтинге FTSE и европейского уровня, снизившись на 1,7 процента после того, как аналитики Barclays снизили рейтинг акций компании. Напротив, Cellnex Telecom занял первое место в рейтинге Stoxx 600, нарастив капитализацию почти на 5 процента после сообщений в СМИ о том, что American Tower Corp рассматривает возможность покупки испанского оператора и расширения своей деятельности в Европе. Акции Ericsson также выросли на 4,4 процента в среду после того, как Cevian Capital решила купить более 5 процентов шведского производителя телекоммуникационных устройств. В Италии банковский сектор продолжал ощущать давление, поскольку в отчетах указывалось, что Banca Popolare di Vicenza и Veneto Banca могут завершить свою деятельность. Кроме того, неопределенность вокруг предстоящих выборов по избранию нового правительства также направляет этот сектор на отрицательную территорию. Акции Ubi Banca упали на 1,9 процента, а Banco Bpm снизился на 1,8 процента в утренних сделках. Данные по инфляции в еврозоне указывают на снижение инфляции с апреля из-за падения цен на энергоносители. Инфляция в мае составила 1,4 процента, по сравнению с 1,9 процента в апреле. Между тем, Франция и Германия хотят договориться о новой общей системе налогообложения корпораций до выборов в Национальную ассамблею Франции в следующем месяце, заявил во вторник министр финансов Германии Вольфганг Шойбле, сообщает Reuters. На текущий момент FTSE 7542.50 15.99 0.21% DAX 12615.11 16.43 0.13% CAC 5305.70 -0.24 0% Информационно-аналитический отдел TeleTrade Источник: FxTeam
Authored by Don Quijones, Spain & Mexico, editor at Wolf Street Here’s Why Italy’s Banking Crisis Has Gone Off the Radar For a country that is on the brink of a gargantuan public bailout of its toxic-loan riddled banking sector, or failing that, a full-blown financial crisis that could bring down the European financial system, things are eerily quiet in Italy these days. It’s almost as if the more serious the crisis gets, the less we hear about it — otherwise, investors and voters might get spooked. And elections are coming up. But an article published in the financial section of Italian daily Il Sole lays out just how serious the situation has become. According to new research by Italian investment bank Mediobanca, 114 of the close to 500 banks in Italy have “Texas Ratios” of over 100%. The Texas Ratio, or TR, is calculated by dividing the total value of a bank’s non-performing loans by its tangible book value plus reserves — or as American money manager Steve Eisman put it, “all the bad stuff divided by the money you have to pay for all the bad stuff.” If the TR is over 100%, the bank doesn’t have enough money “pay for all the bad stuff.” Hence, banks tend to fail when the ratio surpasses 100%. In Italy there are 114 of them. Of them, 24 have ratios of over 200%. Granted, many of the banks in question are small local or regional savings banks with tens or hundreds of millions of euros in assets. These are not systemically important institutions and can be resolved without causing disturbances to the broader system. But the list also includes many of Italy’s biggest banks which certainly are systemically important to Italy, some of which have Texas Ratios of over 200%. Top of the list, predictably, is Monte dei Paschi di Siena, with €169 billion in assets and a TR of 269%. Next up is Veneto Banca, with €33 billion in assets and a TR of 239%. This is the bank that, together with Banco Popolare di Vicenza (assets: €39 billion, TR: 210%), was supposed to have been saved last year by an intervention from government-sponsored, privately funded bank bailout fund Atlante, but which now urgently requires more public funds. Their combined assets place them seventh on the list of Italy’s largest banks. Some experts, including the U.S. bank hired last year to save MPS, JP Morgan Chase, have warned that Popolare di Vicenza and Veneto Banca will not be eligible for a bailout since they are not regarded as systemically important enough. This prompted investors to remove funds from the banks, further exacerbating their financial woes. According to sources in Rome, the two banks’ failure would send shock waves through the wider Italian financial industry. There are other major Italian banks with Texas Ratios well in excess of 100%. They include: Banco Popolare (the offspring of a merger of Banco Popolare di Verona e Novara and Banca Popolare Italiana in 2017 and then a subsequent merger with Banca Popolare di Milano on 1 January 2017): €120 billion in assets; TR: 217%. UBI Banca: €117 billion in assets; TR: 117% Banca Nazionale del Lavoro: €77 billion in assets; TR: 113% Banco Popolare Dell’ Emilia Romagna: €61 billion in assets; TR: 140% Banca Carige: €30 billion in assets; TR: 165% Unipol Banca: €11 billion in assets; TR: 380% In sum, almost all of Italy’s largest banking groups, with the exception of Unicredit, Intesa Sao Paolo and Mediobanca itself, have Texas Ratios well in excess of 100%. But, as Eisman recently pointed out, the two largest banks, Unicredit and Intesa Sanpaolo, have TRs of over 90%. As long as the other banks continue to languish in their current zombified state, they will continue to drag down the two bigger banks. And if either Unicredit or Intesa begin to wobble, the bets are off. To stay on the right side of the solvency threshold, Unicredit has already had to raise €13 billion of new capital this year and last week it took advantage of the ECB’s latest splurge of charitable lending (formally known as TLTRO II) to borrow €24 billion of free money. But as long as the financial health of the banks all around it continues to deteriorate, staying upright is going to be a tough order. This is where things get complicated. In order to qualify for public assistance, banks must be solvent. Presumably, that would automatically disqualify any bank with a Texas Ratio of over 150%, which includes MPS, Banco Popolare, Popolare di Vicenza, Veneto Banca, Banca Carige and Unipol Banca. The bailout must also comply with current EU regulations including the Bank Recovery and Resolution Directive of Jan 1, 2016, which specifically mandates that before public funds are injected into a bank, shareholders and creditors must be bailed in for a minimum amount of 8% of total liabilities, as famously happened in the rescue of Cyprus’ banking system in 2013. The Italian government knows that this approach could end up wiping out retail investors (otherwise known as voters) who were missold, in many cases fraudulently, subordinated bonds by cash-hungry banks in the wake of the last crisis, in turn wiping out the government’s votes. To avoid such an outcome, the government has proposed compensating those retail bondholders with public funds, just as the Spanish government did with the holders of preferente bonds. Which, of course, is in direct contravention of EU laws. So far, the European Commission has stayed silent on the issue, presumably in the hope that the resolution of Italy’s financial sector can be held off until at least after the French elections in late April, if not the German elections in September. Then, if those elections go Brussels’ way, a continent-wide taxpayer funded bailout of banks’ NPLs can be unleashed, as already requested by ECB Vice President Vitor Constancio and European Banking Authority President Andrea Enria. With no guarantee that Italy’s NPL-infested banks can hold out that long, it’s a dangerous waiting-and-hoping game. In the meantime, shhhhhhhh… By Don Quijones.
Европейские фондовые индексы демонстрируют умеренно позитивную динамику, чему способствует подорожание акций автомобильного секторе. Кроме того, инвесторы анализируют последние статданные из Китая и ожидают старта сезона корпоративной отчетности в США. Данные показали, что объем экспорта из Китая резко понизился в декабре ввиду слабости спроса, что усилило тревогу инвесторов о состоянии второй по величине экономики мира. Главное таможенное управление КНР сообщило, что общий объем внешней торговли в декабре сократился на 6,8% годовых, составив 3,684 триллиона долларов. При этом объем экспорта Китая отдельно в декабре составил 209,4 миллиарда долларов, сократившись на 6,1% по сравнению с аналогичным периодом прошлого года. Объем импорта КНР в декабре составил 168,6 миллиарда долларов, сократившись на 3,1% годовых. Кроме того, стало известно, экспорт Китая по итогам 2016 года сократился на 7,7% годовых, импорт сократился на 5,5% годовых. Объем экспорта Китая в 2016 году составил 2,097 триллиона долларов, а импорт - 1,587 триллиона долларов. Положительное сальдо торгового баланса по итогам 2016 года составило 509,9 миллиарда. Инвесторы также готовятся к сезону отчетов в США, который стартует уже сегодня. Свои финпоказатели за 4-й квартал опубликуют такие банки, как J.P. Morgan Chase, Bank of America и Wells Fargo. Предполагается, что прибыль компаний сектора S&P 500 вырастет на 3% годовых. Сводный индекс крупнейших предприятий региона Stoxx Europe Index 600 вырос на 0,6%, до уровня 364,68. Большинстве секторов и фондовых бирж торгуются на положительной территории. Датчик акций автомобильного сегмента поднялся на 0,59 процента, несмотря на новости о том, что агентство по охране окружающей среды США обвинило Fiat Chrysler Automobiles в установке на автомобилях программного обеспечения, занижающего показатели по выбросам вредных веществ. Однако, автоконцерн отверг данные обвинения. В настоящее время акции Fiat Chrysler Automobiles демонстрируют повышение на 3,6%. Капитализация Renault снизились на 2,4 процента после сообщений о том, что французские власти начали расследование в отношении компании, заподозрив ее в манипуляции данными о выхлопах автомобилей. Акции сектора здравоохранения растут, восстанавливаясь после замечаний, сделанных ранее на этой неделе президентом США о том, что фармацевтическим компаниям "сходят с рук убийства" . Датчик акций основный ресурсов демонстрирует снижение, реагируя на слабые данные по Китаю. Стоимость Ubi Banca выросла на 7,3% после того, как инвесторы одобрили увеличение капитала и коммерческое предложение о покупке трех мелких итальянских банков. Цена бумаг Technicolor обвалилась на 20%, так как французская компания заявила, что по итогам 2016 года размер прибыли оказался меньше, чем ожидалось. На текущий момент FTSE 100 +20.27 7312.64 +0.28% DAX +67.03 11588.07 +0.58% CAC 40 +43.61 4907.58 +0.90% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
UBI Banca согласился за символический евро купить три региональных банка – Banca Marche, Banca Etruria и CariChieti, которые правительству пришлось спасать от банкротства в ноябре 2015 г. Об этом сообщают FT и Reuters. UBI Banca согласился на сделку при условии, что до ее закрытия итальянский фонд помощи банкам вольет в капиталы этих банков 450 млн евро, а сами они избавятся от 2,2 млрд евро плохих кредитов. «В ближайшие дни сделка будет закрыта», – говорит источник Reuters.
Европейские фондовые индексы умеренно снизились, так как инвесторы анализируют свежие корпоративные отчеты и переваривают последние замечания избранного президента США. Вместе с тем, определенную поддержку рынку оказывает ралли товарно-сырьевых активов. Эксперты отмечают, что пресс-конференции Трампа оставила инвесторов в неведении и заставила их пересмотреть свои взгляды на последствия избрания Трампа президентом. В целом, речь Трампа была посвящена целому ряду вопросов, от сообщений спецслужб России и США, возможного конфликта интересов между частным бизнесом Трампа в сфере недвижимости и его обязанностями в качестве президента, и до отмены реформы о здравоохранении, принятой предыдущим президентом. Теперь внимание инвесторов переключается на запланированную на 20 января инаугурационную речь Трампа. Он будет выступать по подготовленному сценарию, поэтому может более обдуманно коснуться вопросов, наиболее волнующих мировые рынки. На динамику торгов также повлияли статданные по Франции и еврозоне. Окончательные данные, опубликованные Статистическим бюро Insee, показали, что инфляция потребительских цен во Франции ускорилась в декабре, подтвердив первоначальные оценки. Согласно отчету, по итогам декабря потребительские цены выросли на 0,6 процента в годовом исчислении, что оказалось немного быстрее, чем прирост на 0,5 процента в ноябре. Кроме того, последний темп роста цен был самым сильным с мая 2014 года. Цены на энергоносители выросли на 4,3 процента годовых, а продовольственные товары подорожали на 0,7 процента. Расходы на услуги увеличились на 0,9 процента. В месячном исчислении, потребительские цены выросли на 0,3 процента, в соответствии с предварительными данными, после стабилизации в предыдущие два месяца. Между тем, отчет, представленный Статистическим управлением Eurostat, показал: с учетом сезонных колебаний объем промпроизводства в еврозоне увеличился в ноябре на 1,5% после роста на 0,1% в предыдущем месяце (пересмотрено с -0,1%). Эксперты прогнозировали повышение лишь на 0,5%. Тем временем, среди стран ЕС промпроизводство выросло на 1,6% после снижения на 0,1% в предыдущем месяце. В годовом выражении промпроизводство увеличилось на 3,2% в еврозоне и на 3,1% среди стран ЕС. Ожидалось, что производство в еврозоне вырастет на 1,6% после повышения на 0,8% в октябре (пересмотрено с +0,6%). Сводный индекс крупнейших предприятий региона Stoxx Europe Index 600 снизился на 0,31%, до уровня 363,78. Все основные индексы и большинство секторов торгуются в "красной зоне". Максимальное падение демонстрируют акции сектора здравоохранения, что связано с комментариями Трампа. Он указал на необходимость снизить цены на лекарства с помощью проведения торгов. Котировки французской Sanofi опустились на 0,8%, а акции швейцарской Novartis упали на 3,1%. Негативную динамику также фиксирует телекоммуникационный сектор. Стоимость Mediaset упала на 3,4% после того, как агентство Reuters сообщило, что Fininvest, акционер Mediaset, не получил никаких предложений от французской Vivendi, чтобы разрешить спор между фирмами. Цена бумаг Ubi Banca выросла на 7,7% после объявления о планах купить три мелких итальянских банка.. Акции Richemont - производителя товаров класса люкс - подорожали на 8,3% после сообщения о том, что в последнее квартале 2016 года объем продаж составил 3,09 млрд. евро. Капитализация Tesco - крупнейшей сети супермаркетов в Великобритании - сократилась на 2,3%, несмотря на заявления, что основные продажи выросли на 0,7% в период рождественских праздников. На текущий момент FTSE 100 -12.16 7278.33 -0.17% DAX -57.10 11589.07 -0.49% CAC 40 -6.75 4881.96 -0.14% Информационно-аналитический отдел TeleTradeИсточник: FxTeam
All the day’s economic and financial news, as stock markets in London and New York hover around their highest levelsFTSE 100 at new peak a day after previous closing highBrexit, Trump and 25 spoons of sugar: our top business stories of 2016Italian PM blasts ECB over bailoutNationwide: London house price growth below UK average 5.35pm GMT The FTSE 100 may have been toasting a new closing peak, but elsewhere in Europe shares were drifting lower, with banking stocks proving a drag on markets. The final scores in Europe showed: Related: FTSE 100 soars to new closing high 4.44pm GMT It looked a bit unlikely as the FTSE 100 drifted lower for much of the day, but the leading index managed a last minute dash to a new closing high.The index ended 14.18 points higher at 7120.26, within sight of the all time record reached on 11 October this year. With gold and silver prices moving higher, precious metal miners such as Randgold Resources and Fresnillo helped push the index into record territory. Continue reading...
Большинство фондовых индексов Западной Европы завершили в плюсе сессию во вторник на фоне повышенной волатильности и низких объемов торгов.
Почти все европейские фондовые индексы растут во вторник на фоне повышенной волатильности и низких объемов торгов.
Европейские фондовые индексы снижаются в понедельник.