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ECB Rejects Request for Greek Swap Files, Citing `Acute' Risks
The European Central Bank refused to disclose internal documents showing how Greece used derivatives to hide its government debt because of the “acute” risk of roiling markets, President Jean-Claude Trichet said.
The ECB turned down a request and an appeal by Bloomberg News to release two briefing documents officials drafted for the central bank’s six-member Executive Board in Frankfurt this year. The notes outline how Greece used the swaps to hide its borrowings, according to a March 3 note attached to the papers and obtained by Bloomberg News.
“The information contained in the two documents would undermine the public confidence as regards the effective conduct of economic policy,” Trichet wrote in an Oct. 21 letter in which he rejected the appeal. Disclosure “bears, in the current very vulnerable market environment, the substantial and acute risk of adding to volatility and instability.”
The ECB is withholding the information six months after the European Union and International Monetary Fund led a 110 billion-euro bailout ($154 billion) for Greece. The government didn’t originally disclose the swaps, which were designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. Eurostat, the EU’s statistics agency, is still trying to work out how Greece hid the deficit.
The Greek swaps fueled a financial crisis that threatened the breakup of the region’s currency. The government now says the swaps, some of which were arranged by Goldman Sachs Group Inc., may have caused “long-term damage” for taxpayers.
‘Full Disclosure’
“There’s only one solution to resolving the current uncertainty: full disclosure,” said Gustavo Piga, author of “Derivatives and Public Debt Management,” and a professor at Tor Vergata University in Rome. “The ECB, the European Commission and Eurostat need to show that they are aware of all the transactions and that they have no issue in disclosing them. The market has been left to think the worst.”
Investor confidence in Greece’s ability to repay its debt is weakening. The extra yield investors demand to hold the nation’s 10-year government bonds instead of German 10-year bunds climbed to 893 basis points on Nov. 4, up from a four- month low of 649 on Oct. 18. The spread set a record of 965 on May 7.
The IMF, which published a sensitivity analysis of Greece’s debt in September, said it identified 5 billion euros of swaps that could increase public borrowings. Officials at the Washington-based fund declined to comment beyond the report.
‘Big Mistake’
Eurostat will by Nov. 15 publish revised budget deficit figures for Greece that will take into account the effect of the swaps. Tim Allen, a spokesman for Eurostat, said the agency has everything it requested from Greece. The agency is currently examining data sent to Greece’s statistics office.
The government has given Eurostat all relevant details on the transactions, said a finance ministry official in Athens who declined to be identified. The impact of the swaps on the deficit is “small,” the official wrote in an e-mail, declining to elaborate.
“Given the history of transparency with respect to Greece, which we all know is pretty bad, it would be a big mistake by the ECB to refuse this” request, said Manfred Neumann, a professor of economic policy at the University of Bonn. “Voters will be more suspicious than they used to be. In my view, there is no defense for not publishing.” Neumann led a group of 155 economists who in 1998 called for a delay in creation of the euro in part because countries hadn’t cut deficits sufficiently.
The ECB must consider demands for access to public documents under a March 2004 EU directive. Individuals and companies can subsequently appeal to the European Ombudsman, which reports to Parliament, and the European Court of Justice.
‘Right to Know’
“As citizens of the EU have every right to know how their taxes are being used to bail out secret financial deals between a government and its bankers, we are considering legal options in the pursuit of transparency and the public interest that may take us to the European Court of Justice in Luxembourg,” Bloomberg News Editor-in-Chief Matthew Winkler said.
The first document is entitled “The impact on government deficit and debt from off-market swaps: the Greek case.” The second reviews Titlos Plc, a securitization that allowed National Bank of Greece SA, the country’s biggest lender, to exchange swaps on Greek government debt for funding from the ECB. It also discusses the existence of similar transactions, the Executive Board said in the cover note for the briefings.
The ECB in its note proposed to change how EU members account for swaps based on Greece’s experience. The executive board, which Trichet heads, manages the bank and oversees its implementation of monetary policy. Members include Vitor Constancio, the ECB’s vice president, and Juergen Stark, the chief economist.
‘Risk Control’
The briefings give officials’ views on the impact of the swaps and analyze how the Titlos transaction would affect “the Eurosystem collateral framework, and associated risk control measures,” Trichet said in his reply to Bloomberg.
Trichet said the documents were used for decision-making and so cannot be released. At the same time, he said the documents were outdated and could mislead investors. Complete information will be published by Eurostat, Trichet said.
“Releasing the two documents would undermine the possibility of ECB’s staff to freely submit uncensored advice to the ECB’s decision-making bodies and that they would be subject to external pressure thus limiting the ECB’s space to think,” Trichet said in his letter.
The European Commission is responsible for overseeing national deficits and Eurostat reviews the statistics. While the ECB is the EU’s most powerful economic institution, its main remit is setting interest rates and fighting inflation. The central bank doesn’t directly oversee national accounts.
‘Unusual Terms’
It was April 2009, seven months before the Greek crisis erupted, when ECB officials first spotted “a swap operation in unusual terms,” according to the March 3 document.
After uncovering Titlos, the ECB’s Governing Council, the bank’s main decision-making body, commissioned the two reports, the first from its Statistics unit and the second from its Market Operations and the Risk Management divisions. Bloomberg is seeking copies of both reports.
The ECB declined to comment on the March 3 note and on the outcome of previous public access requests.
Greece was also in April 2009 considering selling bonds in dollars and yen, the first time it would have sold non-euro debt since 1998. The government then forecast that the deficit would fall to 3.7 percent of gross domestic product in 2009 and that debt would rise to 96.3 percent of GDP in 2009. Greece now says the deficit for that year exceeded 15 percent. The country’s debt amounted to at least 115 percent of GDP, according to Eurostat. Greece hasn’t sold bonds with maturities longer than 12 months since March.
Goldman Sachs
Greece’s fiscal crisis turned attention to off-market swaps arranged by Goldman Sachs that allowed the country to hide the extent of its debt from 2000 onwards. The Goldman Sachs swaps, signed in 2000 and 2001, reduced the country’s foreign- denominated debt in euro terms by 2.37 billion euros and lowered debt as a proportion of GDP to 103.7 percent from 105.3 percent, according to a Feb. 21 statement by Goldman Sachs. Greece told Eurostat that the other swaps were significantly smaller than the Goldman Sachs agreements, according to the EU agency.
“Disclosure could, of course, help with working through what happened, who knew what at what time,” said Carsten Brzeski, a senior economist at ING Groep NV in Brussels who used to work at the European Commission. “Everyone knows they’ll have to watch out for swap arrangements.”
To contact the reporters on this story: Elisa Martinuzzi in Milan at [email protected]; Alan Katz in Paris at [email protected]; Gabi Thesing in London at [email protected]
The European Central Bank refused to disclose internal documents showing how Greece used derivatives to hide its government debt because of the “acute” risk of roiling markets, President Jean-Claude Trichet said.
The ECB turned down a request and an appeal by Bloomberg News to release two briefing documents officials drafted for the central bank’s six-member Executive Board in Frankfurt this year. The notes outline how Greece used the swaps to hide its borrowings, according to a March 3 note attached to the papers and obtained by Bloomberg News.
“The information contained in the two documents would undermine the public confidence as regards the effective conduct of economic policy,” Trichet wrote in an Oct. 21 letter in which he rejected the appeal. Disclosure “bears, in the current very vulnerable market environment, the substantial and acute risk of adding to volatility and instability.”
The ECB is withholding the information six months after the European Union and International Monetary Fund led a 110 billion-euro bailout ($154 billion) for Greece. The government didn’t originally disclose the swaps, which were designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. Eurostat, the EU’s statistics agency, is still trying to work out how Greece hid the deficit.
The Greek swaps fueled a financial crisis that threatened the breakup of the region’s currency. The government now says the swaps, some of which were arranged by Goldman Sachs Group Inc., may have caused “long-term damage” for taxpayers.
‘Full Disclosure’
“There’s only one solution to resolving the current uncertainty: full disclosure,” said Gustavo Piga, author of “Derivatives and Public Debt Management,” and a professor at Tor Vergata University in Rome. “The ECB, the European Commission and Eurostat need to show that they are aware of all the transactions and that they have no issue in disclosing them. The market has been left to think the worst.”
Investor confidence in Greece’s ability to repay its debt is weakening. The extra yield investors demand to hold the nation’s 10-year government bonds instead of German 10-year bunds climbed to 893 basis points on Nov. 4, up from a four- month low of 649 on Oct. 18. The spread set a record of 965 on May 7.
The IMF, which published a sensitivity analysis of Greece’s debt in September, said it identified 5 billion euros of swaps that could increase public borrowings. Officials at the Washington-based fund declined to comment beyond the report.
‘Big Mistake’
Eurostat will by Nov. 15 publish revised budget deficit figures for Greece that will take into account the effect of the swaps. Tim Allen, a spokesman for Eurostat, said the agency has everything it requested from Greece. The agency is currently examining data sent to Greece’s statistics office.
The government has given Eurostat all relevant details on the transactions, said a finance ministry official in Athens who declined to be identified. The impact of the swaps on the deficit is “small,” the official wrote in an e-mail, declining to elaborate.
“Given the history of transparency with respect to Greece, which we all know is pretty bad, it would be a big mistake by the ECB to refuse this” request, said Manfred Neumann, a professor of economic policy at the University of Bonn. “Voters will be more suspicious than they used to be. In my view, there is no defense for not publishing.” Neumann led a group of 155 economists who in 1998 called for a delay in creation of the euro in part because countries hadn’t cut deficits sufficiently.
The ECB must consider demands for access to public documents under a March 2004 EU directive. Individuals and companies can subsequently appeal to the European Ombudsman, which reports to Parliament, and the European Court of Justice.
‘Right to Know’
“As citizens of the EU have every right to know how their taxes are being used to bail out secret financial deals between a government and its bankers, we are considering legal options in the pursuit of transparency and the public interest that may take us to the European Court of Justice in Luxembourg,” Bloomberg News Editor-in-Chief Matthew Winkler said.
The first document is entitled “The impact on government deficit and debt from off-market swaps: the Greek case.” The second reviews Titlos Plc, a securitization that allowed National Bank of Greece SA, the country’s biggest lender, to exchange swaps on Greek government debt for funding from the ECB. It also discusses the existence of similar transactions, the Executive Board said in the cover note for the briefings.
The ECB in its note proposed to change how EU members account for swaps based on Greece’s experience. The executive board, which Trichet heads, manages the bank and oversees its implementation of monetary policy. Members include Vitor Constancio, the ECB’s vice president, and Juergen Stark, the chief economist.
‘Risk Control’
The briefings give officials’ views on the impact of the swaps and analyze how the Titlos transaction would affect “the Eurosystem collateral framework, and associated risk control measures,” Trichet said in his reply to Bloomberg.
Trichet said the documents were used for decision-making and so cannot be released. At the same time, he said the documents were outdated and could mislead investors. Complete information will be published by Eurostat, Trichet said.
“Releasing the two documents would undermine the possibility of ECB’s staff to freely submit uncensored advice to the ECB’s decision-making bodies and that they would be subject to external pressure thus limiting the ECB’s space to think,” Trichet said in his letter.
The European Commission is responsible for overseeing national deficits and Eurostat reviews the statistics. While the ECB is the EU’s most powerful economic institution, its main remit is setting interest rates and fighting inflation. The central bank doesn’t directly oversee national accounts.
‘Unusual Terms’
It was April 2009, seven months before the Greek crisis erupted, when ECB officials first spotted “a swap operation in unusual terms,” according to the March 3 document.
After uncovering Titlos, the ECB’s Governing Council, the bank’s main decision-making body, commissioned the two reports, the first from its Statistics unit and the second from its Market Operations and the Risk Management divisions. Bloomberg is seeking copies of both reports.
The ECB declined to comment on the March 3 note and on the outcome of previous public access requests.
Greece was also in April 2009 considering selling bonds in dollars and yen, the first time it would have sold non-euro debt since 1998. The government then forecast that the deficit would fall to 3.7 percent of gross domestic product in 2009 and that debt would rise to 96.3 percent of GDP in 2009. Greece now says the deficit for that year exceeded 15 percent. The country’s debt amounted to at least 115 percent of GDP, according to Eurostat. Greece hasn’t sold bonds with maturities longer than 12 months since March.
Goldman Sachs
Greece’s fiscal crisis turned attention to off-market swaps arranged by Goldman Sachs that allowed the country to hide the extent of its debt from 2000 onwards. The Goldman Sachs swaps, signed in 2000 and 2001, reduced the country’s foreign- denominated debt in euro terms by 2.37 billion euros and lowered debt as a proportion of GDP to 103.7 percent from 105.3 percent, according to a Feb. 21 statement by Goldman Sachs. Greece told Eurostat that the other swaps were significantly smaller than the Goldman Sachs agreements, according to the EU agency.
“Disclosure could, of course, help with working through what happened, who knew what at what time,” said Carsten Brzeski, a senior economist at ING Groep NV in Brussels who used to work at the European Commission. “Everyone knows they’ll have to watch out for swap arrangements.”
To contact the reporters on this story: Elisa Martinuzzi in Milan at [email protected]; Alan Katz in Paris at [email protected]; Gabi Thesing in London at [email protected]
tommy271
Forumer storico
La storia degli swap è lunga, Goldman Sachs ne era perfettamente a conoscenza di tutti i dettagli (li avevano fatti loro ...) tanto che si trovava short sui nostri titoli già a novembre 2009.
Il tutto, per venire ai giorni nostri, dovrebbe determinare i nuovi livelli di deficit/Pil dal 115% al circa 127% (si stima).
Anche questi già a conoscenza da ottobre.
Non vorrei tirassero in ballo la faccenda degli swap anche per l'Italia. Il nostro Marietto, forse, ne sa qualcosa ...
Il tutto, per venire ai giorni nostri, dovrebbe determinare i nuovi livelli di deficit/Pil dal 115% al circa 127% (si stima).
Anche questi già a conoscenza da ottobre.
Non vorrei tirassero in ballo la faccenda degli swap anche per l'Italia. Il nostro Marietto, forse, ne sa qualcosa ...
tommy271
Forumer storico
Samaras: Obliged to show the other path
ANA-MPA/Main opposition New Democracy (ND) party leader Antonis Samaras, addressing an event held by the Constantine Karamanlis Democracy Institute on Thursday evening, criticised the government for its economic policy and highlighted the "social economy of the market" or "social liberalism" as the ideological base of his own economic proposal.
"Today, in Greece, everything is being paralysed, the tax-receiving state is crushing everything, without result and economic activity is being paralysed, it is not an economy, it is 'desertisation'," Samaras said, adding that "we are obliged, therefore, to disagree and show the other path.
Explaining the social economy of the market, he said "the social economy of the market does not want the 'state-nightwatchman', as extreme neoliberalism does, neither it wants the state 'producer', as state socialism does, it wants the 'state regulator', that is a guardian of both free economic activity and social cohesion."
Samaras further said that social liberalism in a country such as Greece, which is in a crisis, entails fiscal restructuring and the boosting of the economy.
""If you only make 'fiscal restructuring' then the economy is in danger of dissolution and society will be destabilised totally. If, on the other hand, you only boost the market without serious fiscal cutbacks then you will achieve a short-term increase in revenues. But with the first difficulty the deficits will get out of hand again," the ND leader said.
(ana.gr)
ANA-MPA/Main opposition New Democracy (ND) party leader Antonis Samaras, addressing an event held by the Constantine Karamanlis Democracy Institute on Thursday evening, criticised the government for its economic policy and highlighted the "social economy of the market" or "social liberalism" as the ideological base of his own economic proposal.
"Today, in Greece, everything is being paralysed, the tax-receiving state is crushing everything, without result and economic activity is being paralysed, it is not an economy, it is 'desertisation'," Samaras said, adding that "we are obliged, therefore, to disagree and show the other path.
Explaining the social economy of the market, he said "the social economy of the market does not want the 'state-nightwatchman', as extreme neoliberalism does, neither it wants the state 'producer', as state socialism does, it wants the 'state regulator', that is a guardian of both free economic activity and social cohesion."
Samaras further said that social liberalism in a country such as Greece, which is in a crisis, entails fiscal restructuring and the boosting of the economy.
""If you only make 'fiscal restructuring' then the economy is in danger of dissolution and society will be destabilised totally. If, on the other hand, you only boost the market without serious fiscal cutbacks then you will achieve a short-term increase in revenues. But with the first difficulty the deficits will get out of hand again," the ND leader said.
(ana.gr)
tommy271
Forumer storico
EU consults on sweeping changes to rating agencies
By Huw Jones
LONDON | Fri Nov 5, 2010 1:00am EDT
LONDON Nov 5 (Reuters) - Credit rating agencies may have to tell a country three days in advance if they plan to downgrade its sovereign debt according to a European Commission public consultation to be launched on Friday.
The European Central Bank or national central banks could also be "entrusted" with issuing some ratings to increase competition, the consultation document added.
Another idea is to limit publication of sovereign debt rating changes until after the market close in Europe to help smooth out shocks.
The Commission, the European Union's executive body with powers to propose laws, wants to dilute the influence rating agencies have in financial markets.
Investors will face increased pressure to come up with their own assessments of risks in securities like the government and company bonds they want to buy.
EU policymakers are eager to prevent a repeat of Standard & Poor's demotion of Greece to "junk" status earlier this year, which aggravated attempts to mount a rescue package for Athens and win back confidence in the euro currency.
Apart from possibly requiring early warnings to countries who face big rating changes to give them time to challenge any "factual errors" agencies could also face having to disclose, free of charge their full research on public debt.
EU states could also agree not to pay for sovereign ratings, the consultation document said.
Europe and others in the world's Group of 20 leading economies (G20) are already implementing a pledge forcing agencies to obtain authorisation and be more transparent.
The EU consultation concedes that completely eliminating ratings from the calculation of bank regulatory capital requirements does not appear to be a "realistic" solution.
Instead, a more practical approach could be to force banks to obtain ratings from at least two different agencies to improve accuracy, the consultation document said.
The consultation is part of the G20's second front against rating agencies.
The G20 summit in Seoul next week will also endorse global recommendations on reducing reliance on ratings that will shape the EU's likely legislative response mext year.
The sector is dominated by just three agencies, Standard & Poor's (MHP.N), Moody's (MCO.N) and Fitch Ratings (LBCP.PA) and was badly tarnished in the financial crisis after highly rating securitised products that became untradable, helping to trigger firesales and bank rescues.
The EU consulation looks at ways to increase competition in the "oligopolistic" sector but any initiative to create a European rating agency should be carefully assessed to avoid distorting markets or denting the quality of ratings, the consultation document said.
The consultation also looks at whether a fundamental conflict of interest whereby the issuer of debt pays for the rating, can be avoided.
The European Parliament, which has joint say with EU governments on financial laws, will begin drafting its legislative wish list for rating agency changes next week to shape the Commission's thinking.
By Huw Jones
LONDON | Fri Nov 5, 2010 1:00am EDT
LONDON Nov 5 (Reuters) - Credit rating agencies may have to tell a country three days in advance if they plan to downgrade its sovereign debt according to a European Commission public consultation to be launched on Friday.
The European Central Bank or national central banks could also be "entrusted" with issuing some ratings to increase competition, the consultation document added.
Another idea is to limit publication of sovereign debt rating changes until after the market close in Europe to help smooth out shocks.
The Commission, the European Union's executive body with powers to propose laws, wants to dilute the influence rating agencies have in financial markets.
Investors will face increased pressure to come up with their own assessments of risks in securities like the government and company bonds they want to buy.
EU policymakers are eager to prevent a repeat of Standard & Poor's demotion of Greece to "junk" status earlier this year, which aggravated attempts to mount a rescue package for Athens and win back confidence in the euro currency.
Apart from possibly requiring early warnings to countries who face big rating changes to give them time to challenge any "factual errors" agencies could also face having to disclose, free of charge their full research on public debt.
EU states could also agree not to pay for sovereign ratings, the consultation document said.
Europe and others in the world's Group of 20 leading economies (G20) are already implementing a pledge forcing agencies to obtain authorisation and be more transparent.
The EU consultation concedes that completely eliminating ratings from the calculation of bank regulatory capital requirements does not appear to be a "realistic" solution.
Instead, a more practical approach could be to force banks to obtain ratings from at least two different agencies to improve accuracy, the consultation document said.
The consultation is part of the G20's second front against rating agencies.
The G20 summit in Seoul next week will also endorse global recommendations on reducing reliance on ratings that will shape the EU's likely legislative response mext year.
The sector is dominated by just three agencies, Standard & Poor's (MHP.N), Moody's (MCO.N) and Fitch Ratings (LBCP.PA) and was badly tarnished in the financial crisis after highly rating securitised products that became untradable, helping to trigger firesales and bank rescues.
The EU consulation looks at ways to increase competition in the "oligopolistic" sector but any initiative to create a European rating agency should be carefully assessed to avoid distorting markets or denting the quality of ratings, the consultation document said.
The consultation also looks at whether a fundamental conflict of interest whereby the issuer of debt pays for the rating, can be avoided.
The European Parliament, which has joint say with EU governments on financial laws, will begin drafting its legislative wish list for rating agency changes next week to shape the Commission's thinking.
tommy271
Forumer storico
Grecia: riprese spedizioni posta aerea
Erano state interrotte per 48 ore in seguito a raffica attentati
(ANSA) - ATENE, 5 NOV - Sono riprese dopo la mezzanotte le spedizioni di posta aerea privata interrotte per 48 ore in seguito alla raffica di pacchi-bomba contro ambasciate e leaders stranieri. Lo rendono noto le autorita' dopo che ieri era stato deciso, durante una riunione tra funzionari governativi ed operatori pubblici e privati, di rafforzare i controlli sui pacchi in partenza.
Erano state interrotte per 48 ore in seguito a raffica attentati
(ANSA) - ATENE, 5 NOV - Sono riprese dopo la mezzanotte le spedizioni di posta aerea privata interrotte per 48 ore in seguito alla raffica di pacchi-bomba contro ambasciate e leaders stranieri. Lo rendono noto le autorita' dopo che ieri era stato deciso, durante una riunione tra funzionari governativi ed operatori pubblici e privati, di rafforzare i controlli sui pacchi in partenza.
tommy271
Forumer storico
Insecurity breeds instability
Prime Minister George Papandreou’s decision to bring up the issue of general elections at a time such as this has caused significant damage to the government’s reputation and to the morale of the people.
Neither the people nor the government have any time to lose and everyone’s attention should be firmly focused, day and night, on cutting state expenditures and bringing about the changes necessary to the state mechanism so that it can run more efficiently.
Instead, attention has been diverted to the local elections on Sunday and to the prospect that their outcome may signal a return to the polls for a new government. As a result, the state mechanism, which resisted the changes anyway but was beginning to grind into some sort of action, has once more come to a halt.
What the entire government and the state apparatus should be dealing with is the country’s finances, to the exclusion of anything else. Instead, party politics and personal insecurities are creating instability where there needs to be calm.
***
Un commento politico del quotidiano conservatore "Kathimerini".
Prime Minister George Papandreou’s decision to bring up the issue of general elections at a time such as this has caused significant damage to the government’s reputation and to the morale of the people.
Neither the people nor the government have any time to lose and everyone’s attention should be firmly focused, day and night, on cutting state expenditures and bringing about the changes necessary to the state mechanism so that it can run more efficiently.
Instead, attention has been diverted to the local elections on Sunday and to the prospect that their outcome may signal a return to the polls for a new government. As a result, the state mechanism, which resisted the changes anyway but was beginning to grind into some sort of action, has once more come to a halt.
What the entire government and the state apparatus should be dealing with is the country’s finances, to the exclusion of anything else. Instead, party politics and personal insecurities are creating instability where there needs to be calm.
***
Un commento politico del quotidiano conservatore "Kathimerini".
dierre
Forumer storico
ma per uno che vende c'è uno che compra?? Chi?
tommy271
Forumer storico
Sovereign rating key for banks
Any negative action on country will be mirrored in lenders; Greek/German bond yield spreads above 900 bps The financial performance and risk profiles of Greece’s top four banks will largely depend on developments in Greece’s sovereign debt rating, Fitch Ratings said yesterday.
“The fiscal and macroeconomic deterioration in Greece along with the multiple downgrades of Greece’s sovereign rating have led to a close correlation between Greek sovereign and Greek bank risk,” Fitch said in a report, referring to National Bank, Eurobank EFG, Alpha Bank and Piraeus Bank. “Any negative rating action on Greece is likely to be mirrored in the rating of Greek banks.”
Profitability pressure from sustained high nonperforming loan charges in 2011 could be partly offset by loan repricing, cost control, expected lower marked-to-market trading losses and better prospects in exchanges in Southeast Europe and Turkey, the rating agency said.
Although the major Greek banks’ levels of capital are “adequate,” the macroeconomic environment requires significant capital buffers that are above the regulatory minimum to cover anticipated credit losses, Fitch said.
Meanwhile, the premium investors demand to hold 10-year Greek government bonds rather than benchmark German bunds rose yesterday after the European Central Bank’s chief said nothing supportive for the peripheral countries of the eurozone – Greece, Spain, Portugal and Ireland, according to traders.
The Greek/German bond yield spread broke above 900 basis points (bps) yesterday for the first time since late September, touching 901 bps versus 858 bps on Wednesday.
The equivalent Portuguese spread hit 431 bps, up 31 bps on the day, while the Irish/German bond yield spread rose to a fresh eurozone lifetime high of 540 basis points, up 20 bps.
European Central Bank President Jean-Claude Trichet, speaking after the eurozone’s central bank left rates unchanged at 1.0 percent earlier in the session, had offered “nothing that is friendly for peripheral sovereigns,” a dealer in London said, Reuters reported. “He didn’t hint that the liquidity exit strategy will be extended or anything like that, so there is simply nothing there for people to feel good on about peripheral debt,” the dealer added.
(Kathimerini.gr)
“The fiscal and macroeconomic deterioration in Greece along with the multiple downgrades of Greece’s sovereign rating have led to a close correlation between Greek sovereign and Greek bank risk,” Fitch said in a report, referring to National Bank, Eurobank EFG, Alpha Bank and Piraeus Bank. “Any negative rating action on Greece is likely to be mirrored in the rating of Greek banks.”
Profitability pressure from sustained high nonperforming loan charges in 2011 could be partly offset by loan repricing, cost control, expected lower marked-to-market trading losses and better prospects in exchanges in Southeast Europe and Turkey, the rating agency said.
Although the major Greek banks’ levels of capital are “adequate,” the macroeconomic environment requires significant capital buffers that are above the regulatory minimum to cover anticipated credit losses, Fitch said.
Meanwhile, the premium investors demand to hold 10-year Greek government bonds rather than benchmark German bunds rose yesterday after the European Central Bank’s chief said nothing supportive for the peripheral countries of the eurozone – Greece, Spain, Portugal and Ireland, according to traders.
The Greek/German bond yield spread broke above 900 basis points (bps) yesterday for the first time since late September, touching 901 bps versus 858 bps on Wednesday.
The equivalent Portuguese spread hit 431 bps, up 31 bps on the day, while the Irish/German bond yield spread rose to a fresh eurozone lifetime high of 540 basis points, up 20 bps.
European Central Bank President Jean-Claude Trichet, speaking after the eurozone’s central bank left rates unchanged at 1.0 percent earlier in the session, had offered “nothing that is friendly for peripheral sovereigns,” a dealer in London said, Reuters reported. “He didn’t hint that the liquidity exit strategy will be extended or anything like that, so there is simply nothing there for people to feel good on about peripheral debt,” the dealer added.
(Kathimerini.gr)
tommy271
Forumer storico
National Bank of Greece...
National Bank of Greece (NBG) has called a shareholders’ meeting for November 26 to seek approval to buy back 350 million euros’ worth of preference shares issued by the government.
The lender had said it planned to buy back the shares after a 1.8-billion-euro sale of new shares and convertible bonds.
NBG shares rallied more than 4 percent during yesterday’s session on the Athens bourse, with investors expecting the move to pave the way for the bank to resume paying a dividend, but ended the day 0.94 percent lower at 7.38 euros.
(Kathimerini.gr)
National Bank of Greece (NBG) has called a shareholders’ meeting for November 26 to seek approval to buy back 350 million euros’ worth of preference shares issued by the government.
The lender had said it planned to buy back the shares after a 1.8-billion-euro sale of new shares and convertible bonds.
NBG shares rallied more than 4 percent during yesterday’s session on the Athens bourse, with investors expecting the move to pave the way for the bank to resume paying a dividend, but ended the day 0.94 percent lower at 7.38 euros.
(Kathimerini.gr)
- Stato