EU economy goes from strength to strength

michaels

http://www.bbc.co.uk/news/business-40184347

Nothing to see here, just a big Spanish bank going under despite all the 'stress tests' claiming all is fine.

Lets hope it doesn't end up in Lloyds rescuing HBOS type scenario.

cogito

michaels wrote: »

http://www.bbc.co.uk/news/business-40184347

Nothing to see here, just a big Spanish bank going under despite all the 'stress tests' claiming all is fine.

Lets hope it doesn't end up in Lloyds rescuing HBOS type scenario.

A more detailed analysis from zerohedge recently:

http://www.zerohedge.com/news/2017-06-05/spanish-banking-crisis-spreads-banco-popular-credit-curve-inverts

There are also major worries about the Caixa and Unicaja banks.

Carl31

See, your problem here is remembering the EU is made up of more countries and economies than the UK and Germany

Thrugelmir

Bought for 1 Euro.

Going to be the bondholders that take the hit on this failure.

UK banks are in a far better place than many of their European counterparts.

michaels

Thrugelmir wrote: »

Bought for 1 Euro.

Going to be the bondholders that take the hit on this failure.

UK banks are in a far better place than many of their European counterparts.

I think the shareholders have taken a bit of a loss too....are any tiers of the cocos being bailed in?

Thrugelmir

michaels wrote: »

I think the shareholders have taken a bit of a loss too....are any tiers of the cocos being bailed in?

Appears that it's on the cards.

The price of Banco Popular’s riskiest form of debt, known as CoCo’s, has been wiped out in the first example of the value of the hybrid asset class collapsing in the rescue of a European bank.

Contingent capital bonds were designed as part of global regulatory shift to shore up bank balance sheets after the financial crisis. They are part of a lender’s capital ratio and are converted into shares should a bank’s common equity tier one ratio fall below a certain level. Coupon payments can also be suspended before that threshold is reached.

Banco Popular’s AT1 bonds had slumped to record lows last week on fears the struggling Spanish lender would fail to fill a gaping capital hole and find a buyer. The value of the bonds has now fallen close to 0 cents after Santander stepped in to rescue Banco, in an announcement this morning.

Santander’s rescue comes after the European Central Bank declared Banco was “failing or likely to fail”. This led to the ECB’s banking oversight body – the Single Resolution Body – stepping in to orchestrate its sale last night.

No AT1 bond has yet incurred losses for investors, either in terms of missed principal or coupon payments.

Banco Popular’s €500m 11.5 per cent AT1 bond has collapsed 50 points to a bid value of just 5 cents on the euro, while another fell 45 points to 2 cents this morning (see chart above).

One bank bond investor said that “nothing is really trading”, however, as the bonds’ real price is “zero”

Pimco owned €279m of Popular’s outstanding €1.25bn of face value in AT1 bonds at the end of March, according to regulatory filings, making it by far the largest holder at the time.

https://www.ft.com/content/791c89b3-065e-32aa-84b0-80e2ab25c062

cogito

The deal includes Santander taking on bad property loans amounting to €33bn. Looks like a shotgun wedding with the ECB holding the trigger.

Thrugelmir

One wonders why this bank has been allowed to carry on for so long. May explain the ECB's current policies.

LHW99

One wonders why this bank has been allowed to carry on for so long.

Can't help wondering the same about the Co-op bank, especially now that Virgin money has withdrawn from the process
http://www.financialreporter.co.uk/finance-news/virgin-money-withdraws-from-co-op-bank-takeover.html