European bank investors are worried about a wave of loan defaults. European bank bosses are not. Rising interest rates and a cost-of-living crisis will cause economic pain, but the pessimism looks overdone.
bad-debt impairment charges in 2022 would be lower than his previous estimate of 0.2% of total loans. BNP Paribas on Friday took a smaller credit-loss charge for the second quarter than it did last year.
Bank shareholders don’t share their optimism. Take the decline in their market value as a crude proxy for the magnitude of loan losses that investors are bracing for, since any credit impairments will erode shareholders’ equity once they have eaten through earnings. The fall in valuation since Feb. 18 for the five lenders is on average equivalent to 1.9% of their outstanding loans. That’s more than twice the amount that the same lenders set aside in 2020 to cover lockdown-induced defaults.
It’s unlikely that a recession this year or next would be twice as painful as the pandemic. For starters, interest rates are rising, which boosts lending margins and gives banks extra revenue to absorb writedowns. Second, European unemployment surged by more than a percentage point in 2020, but economistsby the ECB expect it to keep falling over the next two years. It’s hard to see a big surge in defaults so long as borrowers hang onto their jobs.
Österreich Neuesten Nachrichten, Österreich Schlagzeilen
Similar News:Sie können auch ähnliche Nachrichten wie diese lesen, die wir aus anderen Nachrichtenquellen gesammelt haben.
Breakingviews - China’s politburo serves investors a nothingburgerThe first rule of growth target is you don’t talk about growth target. At Thursday’s meeting of the political bureau of the Chinese Communist Party’s Central Committee, officials re-committed to plan A: Covid-19 eradication, sustained pressure on the real estate sector, plus the usual anodyne commitments to improving credit support, defusing financial risk, and boosting domestic demand and entrepreneurship. To quote Greta Thunberg, “blah blah blah”. Those who expected a clear signal that the government is abandoning its goal of expanding the economy 5.5% this year might be disappointed, but it’s clear that pandemic control comes first.
Weiterlesen »
Market Wrap: Crypto Markets Trade Higher as Fed Raises Rates by Expected AmountMARKET WRAP: BTC jumped after the U.S. central bank’s interest rate hike, pushing higher for the second day in a row. GWilliamsJr_CMT and JimmyHe32 report.
Weiterlesen »
US lawmaker calls for Apple and Google to provide info on fake crypto appsUS Senator Sherrod Brown has sent letters requesting information on crypto scam prevention to Apple and Google CEOs. According to the lawmaker, 'Industry shouldn’t be allowed to write the rules that they want to play by”.
Weiterlesen »
Live Coverage: U.S. Senate Committee Holds Hearing on Protecting Crypto InvestorsThe Committee on Banking, Housing and Urban Affairs is holding a hearing on 'Protecting Investors and Savers: Understanding Scams and Risks in Crypto and Sec...
Weiterlesen »
Breakingviews - Breakingviews: Credit Suisse revamp risks being bad copy of UBSCredit Suisse is finally facing up the full extent of its problems. The $14 billion Zurich-based bank replaced Chief Executive Thomas Gottstein and on Wednesday announced that new broom Ulrich Koerner will scale back trading to focus on wealth management. The final plan, due later this year, may look like UBS’s from 2012 - but much slower.
Weiterlesen »
Breakingviews - Breakingviews: Cerberus, J.C. Flowers put Indian bad debt on mapIndia’s struggle to work through bad corporate loans is on the verge of shifting from overburdened bank boardrooms to where it ought to be: in the hands of experts. Investment firms J.C. Flowers, Apollo Global Management and Cerberus are leading a fight to take charge.
Weiterlesen »