Thursday, September 22, 2011

Europe Update: Greek Austerity, EU to recapitalise 16 banks

by Calculated Risk on 9/22/2011 03:09:00 PM

Update: from Bloomberg: Europe Officials Weigh Forming Crisis ‘Firewall’

European officials said governments may leverage the region’s bailout program to erect a “firewall” around the sovereign debt crisis once a revamp of the fund is completed.
From the Financial Times: EU set to speed recapitalisation of 16 banks
European officials look set to speed up plans to recapitalise the 16 banks that came close to failing last summer’s pan-EU stress tests as part of a co-ordinated effort to reassure the markets about the strength of the 27-nation bloc’s banking sector.

A senior French official said the 16 banks regarded to be close to the threshold would now have to seek new funds immediately. Although there has been widespread speculation that French banks are seeking more capital, none is on the list.
excerpt with permission
From Bloomberg: Greece Speeds Budget Cuts to Ensure Aid
Measures announced yesterday following two rounds of talks with the European Union and the IMF include: a 20 percent cut in pensions of more than 1,200 euros ($1,650) a month, according to a government statement; pensions paid to those younger than 55 will be shaved by 40 percent for the amount exceeding 1,000 euros and wages will be lowered for 30,000 state employees.

With an 8 billion-euro aid payment in the balance, Greek creditors are also in the final stages of negotiating a bond exchange intended to reduce the country’s debt load of about 350 billion euros.
The Greek 2 year yield was up to 66.5%. The Greek 1 year yield is at 135%.

The Portuguese 2 year yield is up to 17.5% (rising quickly) and the Irish 2 year yield was down to 9.1%.

The Italian 10 year yield was down slightly to 5.7%.

Here are the links for bond yields for several countries (source: Bloomberg):
Greece2 Year5 Year10 Year
Portugal2 Year5 Year10 Year
Ireland2 Year5 Year10 Year
Spain2 Year5 Year10 Year
Italy2 Year5 Year10 Year
Belgium2 Year5 Year10 Year
France2 Year5 Year10 Year
Germany2 Year5 Year10 Year