Risk-shy banks may prompt credit pinch - News and Current Events | futures.io
futures.io futures trading

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

Risk-shy banks may prompt credit pinch
Started:December 11th, 2011 (10:50 AM) by kbit Views / Replies:629 / 0
Last Reply:December 11th, 2011 (10:50 AM) Attachments:0

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

Risk-shy banks may prompt credit pinch

Old December 11th, 2011, 10:50 AM   #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,839 since Nov 2010
Thanks: 3,275 given, 3,321 received

Risk-shy banks may prompt credit pinch

(Reuters) - The European Banking Authority (EBA) has warned lenders against being so risk-averse as to prompt a credit crunch.
It also said regulators would not allow a cut in lending as a means to meeting regulatory capital targets.
Banks have changed their behavior far more than the public has realized in the wake of the financial crisis, EBA head Andrea Enria told German magazine Der Spiegel in an interview.

"At the moment, our concerns have gone to the other extreme: that we could now have the problem banks are too risk-averse, which could ultimately lead to a severe credit crunch," Enria said in the interview in the magazine's Monday edition.

Lenders around Europe will need to drum up about 115 billion euros ($154 billion) in extra capital by June 30 to meet a regulatory capital target set by the watchdog.
Banks can retain earnings, curb dividends and bonuses, sell off chunks of their businesses or reduce risky assets to meet the target, but Enria put them on guard if they were thinking of choking off loans.
"If a bank reduces its lending to small and medium-sized enterprises, it won't be counted (toward meeting the target)," he said. "We will not allow credit supply to be cut."

Banks have until January 20 to present their roadmaps for meeting the regulatory capital target to banking supervisors.
Loan portfolios can be sold, even to hedge funds, to help bolster banks' equity capital cushions, Enria said.
The EBA wants banks to reach a core Tier 1 regulatory capital ratio of 9 percent by the mid-2012 deadline, which should help lenders withstand any market deterioration.

The watchdog's stress tests of banks, based on data from the third quarter, revealed six German lenders need 13.1 billion euros of extra capital to meet the deadline, nearly triple the amount estimated previously.
Commerzbank (CBKG.DE) needs 5.3 billion euros and Deutsche Bank (DBKGn.DE) 3.2 billion, with four other public-sector or co-operative lenders -- NordLB, Helaba, DZ Bank and WestLB -- making up the remainder.
"These sorts of high figures do not necessarily mean that banks are in bad shape," Enria said.

"The most urgent problem is funding, and in that regard the German banks are doing better than others. However, the storm is also affecting them, and they, too, have to strengthen their capital."
Only a few large banks have been able to fund their businesses since July, and have had to pay very high interest rates to do so, Enria said.
"If banks cannot get funds, they stop lending and that damages the economy," he said. "We are stuck in a vicious circle and we have to try to break out of it."

Risk-shy banks may prompt credit pinch: EU watchdog | Reuters

Reply With Quote


futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > Risk-shy banks may prompt credit pinch

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

An Afternoon with FIO trader bobwest

Elite only

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
S&P Cuts Credit Ratings on Several Large Banks Quick Summary News and Current Events 0 November 29th, 2011 06:00 PM
S&P Cuts Credit Ratings on Several Large Banks kbit News and Current Events 0 November 29th, 2011 05:48 PM
REAL Capitalists Move Our Money from Big Banks to Credit Unions Quick Summary News and Current Events 0 November 5th, 2011 06:40 PM
Swedish Banks Told to Gird for Second European Credit Crisis kbit News and Current Events 0 August 18th, 2011 01:37 PM
Yen May Climb to 75 Per Dollar on U.S. Credit-Rating Risk kbit News and Current Events 0 June 15th, 2011 04:10 PM

All times are GMT -4. The time now is 10:27 AM.

Copyright © 2016 by futures.io. All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-23 in 0.07 seconds with 20 queries on phoenix via your IP