Time for banks to go cold turkey on sovereign fix

April 18, 2016

Europe is considering tightening rules that make it easy for lenders to own government debt. Banks addicted to sovereign punts would suffer, and governments lose wiggle room. Yet reform could hasten euro area integration, while ECB bond-buying makes it a less scary prospect.

Portugal in race against time to sort out BES

July 10, 2014

Despite a recent successful rights issue, the Iberian lender is exposed to its troubled major shareholder and has a large exposure to dodgy Angolan loans. Its owners face a difficult refinancing this year. Authorities should demand full transparency and a quick restructuring.

Capital crisis making Italy SpA stronger

By Rob Cox
July 10, 2014

Italian capitalism is undergoing Darwinian selection. Companies can no longer rely on the state, age-old shareholder pacts or even Mediobanca for capital. Firms are being forced to adapt to the rules of global finance to avoid extinction. The next generation looks fit to prosper.

Euro crisis 2.0 will need a new shock absorber

April 4, 2014

European banks kept yields in check by buying sovereign debt in 2010-13. Now that Basel III rules force losses to be deducted from capital, banks like BPI are shedding their holdings. It unpicks the notorious “doom loop,” but leaves the ECB explicitly on the hook in future.

EU banks’ summer funding lull may bring autumn woe

August 18, 2011

European banks have had a nervy summer. Indicators of stress in bank funding markets are flashing red, raising fears of another 2008-style crisis. Those concerns look misplaced for now. But if markets don't improve, the autumn could bring fresh problems.

Europe can protect itself against a Greek default

September 26, 2011

The rest of Europe can and must protect itself against a Greek default. A three-pronged plan is required: 150-200 billion euros to recapitalise banks across the region; extra liquidity, again for banks; and a beefed-up bailout fund to help Italy, if needed.

EU bank recap too blunt an instrument for Spain

October 27, 2011

The point of Europe's recap exercise is to restore confidence in banks and allow them to once again start financing themselves in the wholesale market. Resolving the sovereign debt crisis would clearly help Spain, and by extension its banks. But it won't resolve doubts about possible future real-estate losses in Spain.

Euro zone’s New Year hopes hit triple downer

January 16, 2012

Standard & Poor’s has stripped France and Austria of their triple-A ratings, and cut Italy to the same level as Ireland. Greek debt talks have broken down. The ECB has criticised the region’s fiscal pact. After a brief lull, Europe’s debt crisis is back with a vengeance.

Stalling German motor is Europe’s other difficulty

January 17, 2012

Germany the strong? Well, yes, fiscally. It was not downgraded by S&P because its fiscal deficit is just 1 percent of GDP. But German growth has stalled again. It depends too much on exports. The irony is that the EU’s biggest economy can’t propel itself – or the euro zone.

France is capable of wasting a good ratings crisis

January 18, 2012

Paris has been humbled by losing its triple-A. The chastened country will play second fiddle to über-leader Germany in the euro zone. The setback could be seized as an opportunity to address economic weaknesses and poor prospective growth. But not in this world.