IMF report and bailout calm banking sector

[alp227]

Source: Financial Times

Spain’s big banks are breathing a sigh of relief. The twin news of a clean bill of health from a key International Monetary Fund report, combined with confirmation of a planned €100bn European bailout will, they hope, finally convince investors to make a proper distinction between strong and weak.

“This is very good news,” said a board member of one big bank. “The big question investors had was where the money would come from to shore up the banks that need it. There was a need for a backstop. What we have now with this bailout money is the backstop.”

The IMF report concluded that in a stressed economic scenario, involving a 4.1 per cent fall in GDP and a near-20 per cent slump in house prices this year, Spain’s whole banking system would need a €37.1bn capital injection. Only the country’s “big two”, Santander and BBVA – the “G1” category of banks under IMF nomenclature – would not require fresh capital.

Read more: http://liveweb.archive.org/http://www.ft.com/cms/s/0/8341ac02-b3e6-11e1-8fea-00144feabdc0.html

[Mojorabbit]

1. Perhaps this will enable the EU to kick the can down the road for a bit longer. nt

[dipsydoodle]

2. That was 18 hours ago - this is now

Spain borrowing costs hit euro-era record high :

Spain's borrowing costs have risen to the highest rate since the launch of the euro in 1999.

The benchmark 10-year bond yield hit 6.81%, as optimism about the weekend's Spanish bank bailout continued to evaporate.

http://www.bbc.co.uk/news/business-18405729

[Mojorabbit]

3. The vultures will take them down then

I hope there will not be a collapse that takes the world into a horrible depression. I was hoping this might slow things a bit.