Neil's Feed
May 29, 2013
via Breakingviews

Europe yields to reality on austerity

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The battle between growth and austerity in the euro zone is over. Nobody won.

Austerity is certainly taking a backseat. The European Commission will use its annual economic recommendations on Wednesday to signal a slower pace of fiscal tightening across the euro zone. That will reinforce the two-year leeway Brussels has already signalled it will give the region’s biggest fiscal offenders, Spain and France, to bring deficits down to the target of 3 percent of GDP.

May 1, 2013

BBVA’s hybrid hit is bet on health of Spanish bull

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Neil Unmack

LONDON, May 1 (Reuters Breakingviews) – A bank from the euro
zone’s debt-challenged periphery has been the first to issue a
new breed of loss-absorbing bonds. It is proof that central
bank-whipped bondholders, shrugging off the euro crisis, are
desperate for yield. A 9 percent coupon looks juicy, but it pays
investors less than equity, with no upside.

Apr 18, 2013
via Breakingviews

Bank hierarchy of pain could become a hydra

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Who should lose money when banks fail? Talk of making deposits senior to bondholders might reassure savers rattled by losses in the Cyprus bailout, and avoid bank runs. But it could lead to unhealthy arbitrage between loans and deposits. Vigilance is needed, and lots of “bail-in-able” capital.

Apr 18, 2013

Breakingviews- Bank hierarchy of pain could become a hydra

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)

By Neil Unmack

LONDON, April 18 (Reuters Breakingviews) – Who should lose
money when banks fail? Talk of making deposits senior to
bondholders might reassure savers rattled by losses in the
Cyprus bailout, and avoid bank runs. But it could lead to
unhealthy arbitrage between loans and deposits. Vigilance is
needed, and lots of “bail-in-able” capital.

Apr 12, 2013
via Breakingviews

Euro zone daren’t flunk Lisbon’s solidarity test

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Euro zone finance ministers took the risk of sending the Cypriot economy back to the stone age, with a tough bank restructuring and conservative approach on how much debt the country could take on. They now have a chance to show their sensitive side by giving Portugal and Ireland an extension on their bailout loans. They should seize it: playing hardball again would be self-defeating.

Mar 28, 2013

ECB will have to bankroll new era for euro banks

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)

By Neil Unmack

LONDON, March 28 (Reuters Breakingviews) – European
officials are hurriedly denying that the Cypriot bail-in is a
“template”. Markets know otherwise. The good bank/bad bank model
adopted in Cyprus shows how banks can be recapitalised without
government funds whilst protecting insured depositors – thanks
to senior bondholders and uninsured depositors taking losses.
It’s the right model for the future. For now, it worsens life
for Europe’s weak banks.

Mar 21, 2013
via Breakingviews

Cyprus exit risk is real – and manageable

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Is the European Central Bank ready to start a Cyp-riot? It has threatened to cut off Cyprus’ banks if Nicosia doesn’t take a bailout, potentially triggering the country’s exit from the euro. The ECB has threatened to cut off banks and countries before but backed off. This time it may be serious.

Mar 5, 2013
via Breakingviews

Markets wrong to downplay Italian political risk

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By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Italian bond spreads have risen nearly one percentage point since Italy’s election. It could have been worse – and considering the risks, it should.

Feb 12, 2013

Finmeccanica woes show need for radical overhaul

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Neil Unmack

LONDON (Reuters Breakingviews) – Political vacuums can embolden the Italian government’s criminal investigators. Last week public prosecutors raided the premises of oil company Eni’s (ENI.MI: Quote, Profile, Research) Chief Executive Paolo Scaroni over alleged bribes. They went one step further on Tuesday by arresting Giuseppe Orsi, the chief executive and chairman of Finmeccanica (SIFI.MI: Quote, Profile, Research), another state-controlled company. The move has already started a political storm, but that shouldn’t distract the next government from selling down its stake in the defence contractor, which is Italy’s second-biggest employer.

Feb 12, 2013

Dutch bank expropriation ties CDS in knots

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Neil Unmack

LONDON, Feb 12 (Reuters Breakingviews) – SNS Reaal’s (SR.AS: Quote, Profile, Research)
bondholders lost everything after the Dutch lender’s
nationalisation, and the holders of credit default swaps may not
get compensated. It’s not the first time that CDS language has
been found wanting.