Eurointelligence Daily Briefing, 6 de Junho de 2012. Enviado por Domenico Mario Nuti.

Pedimos desculpa de publicarmos este Eurointelligence com três dias de atraso. Tal deve-se a problemas técnicos. A importância dos assuntos que trata é grande, e a sua leitura continua a valer a pena. Permitimo-nos esclarecer que EFSF é o Fundo Europeu de Estabilização Financeira (FEEF) e FROB é o Fondo de Reestructuración Ordenada Bancaria espanhol.

EFSF to lend directly to the FROB

Suddeutsche Zeitung has the story that the eurozone is about to reach a deal with Spain: a loan to the FROB rescue fund in exchange for commitments on bank sector reform;

the deal would not involve any EFSF equity stakes in Spanish banks, and would raise the Spanish state’s total debt levels;

the purpose of this compromise is to avoid a fully-fledged programme, which Spain is too proud to accept;

the two external auditors appointed to estimate the recapitalisation requirements of the Spanish banking system are expected to report this weekend;

earlier yesterday Spain’s finance minister said the country no longer had access to the markets as the spreads were now intolerable;

Mariano Rajoy for the first time embraced eurobonds and a banking union as a solution to the

European crisis;

Moody’s downgrades several German banks, citing the deterioration of the crisis, and their low loss-absorbing capacity;

Austrian banks were also downgraded due to their exposure to central and eastern Europe;

Holger Steltzner warns against lending Spain money without control over the countries expenditure;

the European Commission is about to propose a bank resolution policy without any degree of cross-country risk sharing;

proposal foresees a fund, financed by savers, and a bail-in of shareholders and bondholders;

Germany’s Bafin rejects a banking union;

Handelsblatt calls Draghi’s banking union an “attack on German savers”;

Martin Wolf gets really gloomy about the world economy – and the eurozone in particular;

German coalition edges towards a stock exchange turnover tax;

a poll shows that 49% of German want Greece to leave the eurozone, with 39% opposed;

the euro crisis, meanwhile, has encouraged the development of a barter economy in Greece.

The eurozone governments are about to reach a compromise on how to rescue Spain, Süddeutsche Zeitung (Link: http://www.sueddeutsche.de/politik/bankenkrise-euro-laender-wollen-spanien-helfen-1.1375586) reports.

According to the paper a solution acceptable to Spain and hardliner countries like Germany could consist of lending money from the EFSF to the Spanish rescue fund FROB. In return the Spanish government would have to commit itself to reform its banking sector by merging some banks and by resolving others. The compromise would be face-saving for the government for Mariano Rajoy because it would avoid a full blown program with tough fiscal conditionality limiting Spain’s sovereignty. At the same time countries like Germany would prevail in their insistence that the rescue fund can only lend to state entities and never to private companies like banks. Additionally Financial Times Deutschland reports there is an acceleration in the decision making in Spain. The two external auditors mandated by the Spanish government to estimate the recapitalization needs of the banking system could already present the results of their work this weekend.

(Just a note: this is not what is generally understood by the rescue fund injecting capital into the banks. This would be a straight-forward loan by the EFSF to the FROB, and this loan would raise the Spanish state’s debt. The only relief would come in the form of lower ESM interest rates as opposed to the market interest rates Spain has to pay right now. We doubt that this scheme will have a sustained effect on Spanish spreads.)

Earlier yesterday, Spain’s finance minister Christobal Montoro said that Spain no longer had effective access to the financial markets, as the risk premium was now too high, as reported by every single newspaper. The statement was viewed as a clear indication that the country is about to negotiate a rescue programme.

Mariano Rajoy, who strangely had rejected eurobonds not too long ago, said yesterday that the EU should adopt a banking union and eurobonds.

Moody’s downgrades German and Austrian banks

Moody’s cut the credit ratings of several German and Austrian banks on Wednesday, citing increased risk of further shocks emanating from the eurozone debt crisis and their limited loss-absorption capacity, Reuters reported during the night. “As a result, the long-term debt and deposit ratings for six groups and one German subsidiary of a foreign group have declined by one notch, while the ratings for one group were confirmed,” it said. The banks included the New York and Paris branches of Commerzbank, Germany’s second-largest lender. Commerzbank U.S. Finance Inc, Dresdner Bank AG, its New York branch as well as Dresdner Finance B.V. also had their ratings cut. Moody’s also said that further to these actions, it had assigned stable outlooks to the ratings of most German banks.  Moody’s said the ongoing rating review for Deutsche Bank AG and its subsidiaries will be concluded together with the reviews for other global firms with large capital markets operations. It noted that that several factors have caused the ratings of many German banks to decline by less than for other European banks, including below-average unemployment, low household and corporate debt levels and the general resilience of the German economy.

Moody’s also cut the rating of the three largest Austrian banks – Erste Bank, UniCredit Bank Austria and Raiffeisen Bank –  citing their exposure to Eastern Europe and the Commonwealth of Independent States region as well as their limited capital buffers and the risks of the euro crisis as factors behind its ratings action..  The downgrades are part of a broad review of banks in the region.

Holger Steltzner warns against lending Spain money without control over the countries expenditure

Frankfurter Allgemeine Zeitung’s financial editor Holger Steltzner (Link: http://www.faz.net/aktuell/wirtschaft/schuldenkrise-und-nun-spanien-11775044.html) warned against giving Spain any rescue money without effective control over the government’s expenditure. “She (Angela Merkel) should not hand over Germany’s credit card because she will have no control over expenditure in the case of Eurobonds, ESM bank rescue and guarantees for bank savings”, he points out. “It is already bad enough that the apparently unpolitical European Central Bank is redistributing risks in the magnitude of billions among the countries of the eurozone.” Steltzner goes on to ask what the Irish would say if the Spaniards would be able “to dump their rotten housing loans at the common rescue fund for which they (the Irish) will also have to pay as they have just decided in a referendum?”