Sydney ACC 19:23 GMT October 26, 2014
Rather than capital shortfalls being the problem as I see it the issue is future growth of their balance sheet. Without a firm capital base these banks will continue to underperform in terms of growth. For an economy to grow it requires its banks to grow as well. There's likely to be a continuing reluctance for investors to invest ordinary capital in these banks as the dividends they pay in the near future are unlikely to reflect the full risk/reward ratio. As consequence they will continue to act as a drag on their respective national economies.
Mtl JP 16:44 GMT October 26, 2014
you see it is like this :
ECB fails 25 banks in health check but problems largely solved - RTRS
Roughly one in five of the euro zone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances ... .. ... the amount of risky loans - which have not been serviced in 90 days - upwards by 136 billion euros to 879 billion ... .. ... an important partial success, which will help reduce uncertainty," said Marcel Fratzscher, president of Germany's DIW economic institute. ...
Kaunas DP 16:32 GMT October 26, 2014
sounds very academic... eur/usd will gap down
GVI Forex john 16:12 GMT October 26, 2014
aL - I agree, but it could generate some secondary EUR demand.?
Dillon AL 15:58 GMT October 26, 2014
The report also states: total shortfall of 25 billion euros ($32 billion), most of which has since been raised by banks
they have 9 months to fill the residual shortfall
this to my mind rather than the capital shortfall is the issue
The stock of bad loans in the euro-area banking system now stands at 879 billion euros, the report said.
Italian banks will have to implement the largest asset-value adjustments according to the findings of the review, equivalent to 12 billion euros. Greek banks will have to revalue by 7.6 billion euros, and German banks by 6.7 billion euros, the report showed.
so using some basic maths the question is where is the balance of approx. 850 billion. cos if that is mainly in the UK then I can see EurGbp being the trade
Dillon AL 15:22 GMT October 26, 2014
why do you think that the demand for the new capital would come from outside the Euro area creating an FX flow. It is much more likely to come through M&A within the borders.
GVI Forex john 11:43 GMT October 26, 2014
Stress tests come out much as leaked on Friday. Depending on how, and in what time-frame the new EUR 25bln in capital is raised, there could be extra EUR demand. This should not be a big surprise to the banks in question. Otherwise, I don't see much in trading implications for the new week. Does anyone have another view?
GVI Forex 11:30 GMT October 26, 2014
Twenty-five banks in the euro area will need to raise 25 billion euros ($31.7 billion) of fresh capital, after the European Central Bank probed their balance sheets and subjected them to a stress test.
Of the 25 banks that failed the assessment, 12 have already covered their shortfalls in the year to Sept. 30, the ECB said....
ECB Test Shows 25 Billion-Euro Capital Gap at Euro Banks
GVI Forex 11:11 GMT October 26, 2014
EZ ASSET QUALITY REVIEW REPORT (AQR)
-- AQR REVEAL 25 BANKS FAILING TI HURDLE END 2013
-- STRESS TESTS REVEAL 24 BANKS FAILING HURDLE
--TOTAL CAPITAL SHORTFALL WAS E24.2 BN AS OF DECEMBER 31
Source: Market News International (MNI) – A Deutsche Börse company
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