Our indicator of systemic risk (SRISK) indicates an expected capital shortfall in the leading Greek banks of approximately €14.5 billion, in line with ECB estimates and below what has been disbursed in the third plan of financial assistance to Greece.
The third bailout offered to Greece could have seemed at first to be yet another “free” loan. Similarly, the call for new elections by the PM Tsipras at the end of the summer could have seemed a risky hawk-dove play to avoid once again the Greek's commitments. Under closer examination, however, these events can be seen as moves that will put some of the pieces of the disarranged puzzle back into place. In fact, Greece could derive some economic benefit from them, not least that of qualifying for the European QE.
At its meeting on 22 October, the ECB opened up the possibility of extending Quantitative Easing (QE2), and stock markets in the Eurozone celebrated with a gain of more than 2% in a single session. With his latest initiative, Draghi has therefore extended the series of “positive surprises” that, for more than a year, he has been providing to European stock markets, and in particular to the Italian market. Will Draghi's words surprise the markets again at the next meeting?
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US bond yields do not seem to reflect neither the domestic economy growth prospects nor the expectations of a less expansionary phase of monetary policy that could start by the end of the year but continue to remain extremely low. One possible explanation is that they are driven by developments in Euro area interest rates.
The role of cost of capital for unlisted banks is becoming increasingly important as part of the consolidation process expected to take place in the Italian banking sector over the next few years. The results of the SREP may have a decisive influence on mergers and groupings among major unlisted banks, and any requests for capital add-ons could result in these banks turning to the market to increase their capital base.
One of the pillars of the Supervisory Review and Evaluation Process (SREP) is business model analysis. Three distinct business models (retail, investment, and diversified) seem to be emerging in Europe; in recent years retail banks, characterised by a traditional asset and liability structure, have shown resilient profitability in the face of a changing macroeconomic and financial environment.
Kara Wilson (email@example.com)
Puglia and Sicily are two regions of Southern Italy that have shown significantly disparate performances in the use of EU Structural Funds because of different needs and priorities taken into consideration by the two regions.
firstname.lastname@example.org, Xiaolin Su (email@example.com)
GDP growth in China has declined to 7% in the second quarter of 2015. Besides the official data release, some other macroeconomic indicators suggest a more difficult situation of China’s economic growth. Keqiang index has kept falling from 2014 onwards and domestic demand is weak as both investments and consumption year-on-year growth are decreasing. Perhaps the decreasing amount of imports is the most direct clue that Chinese economy is slowing down and shows the potential influence on the global economy.
firstname.lastname@example.org, Xiaoxiao Zhang (email@example.com)
In the aftermath of the recent financial crisis, the Greek crisis is having a significant effect on European peripheral countries’ stock market returns, especially in Italy.
The sudden collapse of the stock market in China in July has caused great losses for millions of investors. While China has achieved substantial progress in capital account liberalization, the international investment position suggests that the amount of foreign portfolio investment still remains small as capital controls are relatively heavy in the securities and bond markets. In light of this, the spillover effect of the stock crisis from China is limited.