Here’s a look at IMF analysis of the Non-Performing Loans on Euro area banks’ balance sheets.
Per IMF, low inflation environment in the Euro area is “pushing up real rates, more in countries with higher debt burdens”
Ah, good old Europe… Austerity, Reforms, Structural Changes, Improved Competitiveness, Return to Growth… and rising, rising, rising debt.
Another lift for Greek banks’ ELA via ECB – a EUR900 million click, as previously:Once again, the situation remains unaltered – Greek banks remain tied to ELA for funding, while capital controls cannot be lifted under small tick increases in ELA. In ef…
An interesting chart via Deutsche Bank Research putting break-even (fiscal budget) figures on oil prices for major oil producers:Which puts Russian break-even at USD105 pbl.Reality is: Russia has capacity to increase oil output further and has done so …
Have a new credit card? Will travel… for now… but only for now, as with today’s payments we have less than EUR2 billion credit line remaining available for the country.
Next stop: see here http://graphics.wsj.com/greece-debt-timeline/.
Meanwhile, banks reopening – overhyped on both sides (by the mainstream media as a non-event (re: no mayhem) and by alternative media as a run-waiting-to-happen (re: mayhem)) – came relatively calmly, as banks remain under severe capital controls, limiting withdrawals to EUR420 per person per week. On top of which, checks are cashed only into bank account (no cash); withdrawals abroad and money transfers abroad are not allowed, even on pre-paid cards; limits placed on use of credit and debit cards abroad; no new savings or deposits accounts can be opened; repayments of loans can only be done in line with scheduled payments (no advanced repayments possible except by using cash or transfers from abroad); only unrestricted payments are for tax purposes, social security or bank liabilities payments, plus payments to hospitals and for education.
Any wonder there were no bank runs today? Ah, sure, who would run on an open bank with no cash in it? A taxman?..
But coming back to those bridge finance funds. The EU is now saying the Bailout 3.0 will take 6-8 weeks to agree and structure. There is EUR3.188 billion worth of ECB maturities coming up in 5 weeks, EUR1.344 billion of IMF loans due in September, and EUR3.8 billion worth of short term bonds maturing before 8 weeks runs out. Which begs a question: where will Greece get the money to cover these liabilities?
Eurogroup statement on Greece (h/t @FGoria):Key:Bridge finance via EFSM (as rumoured, so no surprise here);Bridge finance security cushion via SMP profits being moved to an escrow account (unexpected) clearly to ensure Denmark’s and UK agreement t…
First, current policy rates for major advanced economies:
Next: duration and magnitude of rates overshooting (target range set outside mean (pre-crisis period, Euro coverage) +/-1/2 STDEV)
We are now into 80th consecutive month of interest rates statistically outside the mean range, with magnitude of deviation of some 3.05% down on the mean. This implies mean-reversion (increase in the rates) of between 2.70-3.4%.
Meanwhile, 12 mo Euribor margin over policy rates is up to 0.119% in Jul (to-date) compared to 0.113% in June. Corporate rates for new loans (>1mln Euro and 1-5 years duration) margin over ECB rate was up at 2.28% in May compared to 2.03% in April. May was the month when direction of Euribor margin diverged from direction of corporate loans margin, implying increase in banks margins.
Overall, the above shows that pressure on rates reversion to the mean is building up, while banks margins were improving (though we only have data through May on this). Nonetheless, banks margins are down on 2012-2014 averages, implying that more of the costs of any mean reversion in policy rates under current conditions will have to be absorbed by the borrowers.
Good thing, ECB is in no rush to get ahead on rates increases, yet…
So ECB lifted Greek banks’ ELA by EUR900mln to EUR89.9 billion today for the first time since June 23rd.This suggests that Mario Draghi and the team ECB have found a way, for now, to set aside all concerns about Greek banks solvency and extend the life…
In previous two posts, I explored couple of angles on the famous Trust thingy that, allegedly, Greece so massively lacks. But, of course, my comparatives related to the ‘peripheral’ euro states, mostly Ireland. You can use the same two charts to draw c…