Echoes of the crisis
Tuesday 12 June 2012
Noyer (BdF) calls for ECB to be “backbone” of banking union: The Governor of the Bank of France (BdF), Christian Noyer, is calling for the European Central Bank (ECB) and the central banks that are affiliated to it to be the “backbone” of the future banking union many European leaders hope to make a reality. “This is another lesson learnt from the crisis, there are many advantages in keeping banking supervision close to the central bank,” said Noyer in a column published by
The Wall Street Journal,on 12 June. Noyer noted that the UK is going back to this principle and that, in the US, the Federal Reserve System (the Fed) is now in charge of supervising “systemic” establishments – establishments whose default could have chain reaction repercussions on global finances.
Rehn refuses to speculate on Italy’s fate: Economic Affairs Commissioner Olli Rehn refused, late on 11 June, to speculate on the situation in Italy, which some observers think could be next in the firing line in the eurozone crisis – just after Spain. “We made recommendations two weeks ago [to Italy] and they are valid,” he said. “Italy has some serious imbalances but the country is in the process of correcting them and is taking strong and decisive action. We support Italy,” Rehn said. After it was announced, on 9 June, that Spain has secured a eurozone rescue for its banks of up to €100 billion, Italy found itself in the markets’ firing line, on 11 June.
Standard & Poor’s says no change to Spain’s rating in spite of rescue loan for banks: The rating agency Standard & Poor’s said, on 11 June, that there would be no change to Spain’s ‘BBB+’ sovereign credit rating following the announcement that an EU rescue plan of up to €100 billion has been secured for Spanish banks. Furthermore, S&P confirmed the ‘negative’ outlook on Spain’s rating, meaning that the agency is considering lowering it more. S&P released a statement saying that: “The amount of funds Spain is seeking covers our estimate of the provisioning shortfall in both our base case and a scenario of accelerated recognition of 2012-2013 credit losses”.
Spain: Fitch downgrades BBVA and Santander banks by two notches: On 11 June, Fitch downgraded its credit rating for Spain’s two largest banks, Santander and BBVA, by two notches, to ‘BBB+’. The agency nevertheless kept the two banks’ rating higher than Spain’s sovereign rating, in a move that follows its three-notch downgrade last week – to ‘BBB’. Fitch issued a statement saying that it is exceptional for a bank to be rated above its country of origin’s rating. The agency added that “Santander’s and BBVA’s [...] geographical diversification, [and] strong financial performance” allow them to counter the effects of the recession, which Spain fell back into in the first quarter.
Portugal: New record of ECB loans to bank: In May, loans taken out by Portuguese banks with the ECB reached a new high, at €58.7 billion, according to data released on 11 June by the Bank of Portugal. The figure had decreased slightly in April, to €55.4 billion, after reaching the then-record of €56.3 billion in March. Deprived of access to the interbank market since the explosion of the eurozone crisis, Portuguese banks have become largely dependent on ECB financing.
“Italy has some serious imbalances but the country is in the process of correcting them and is taking strong and decisive action,” said Rehn