Deepening EU Banking Crisis Meets Euro-TARP and Taxpayers

Wolf Street ^ | 17 March 2017 | Don Quijones

[Lorianne]

Events are moving so fast in Europe these days, it’s almost impossible to keep up. While much of the attention is being hogged by political developments, including the election in the Netherlands, Reuters published a report warning that the European banking sector may face even higher bad loan risks if the ECB begins to scale back its monetary stimulus programs, something it has already begun, albeit extremely tentatively.

The total stock of non-performing loans (NPL) in the EU is estimated at over €1 trillion, or 5.4% of total loans, a ratio three times higher than in other major regions of the world.

On a country-by-country basis, things look even scarier. Currently 10 (out of 28) EU countries have an NPL ratio above 10% (orders of magnitude higher than what is generally considered safe). And among Eurozone countries, where the ECB’s monetary policies have direct impact, there are these NPL stalwarts: •Ireland: 15.8% •Italy: 16.6% •Portugal: 19.2% •Slovenia: 19.7% •Greece: 46.6% •Cyprus: 49%

That bears repeating: in Greece and Cyprus, two of the Eurozone’s most bailed out economies, virtually half of all the bank loans are toxic.

Then there’s Italy, whose €350 billion of NPLs account for roughly a third of Europe’s entire bad debt stock. Italy’s government and financial sector have spent the last year and a half failing spectacularly to come up with a solution to the problem. The two “bad bank” funds they created to help clean up the banks’ toxic balance sheets, Atlante I and Atlante II, are the financial equivalent of bringing a butter knife to a machete fight. So underfunded are they, they even strugggled to hold aloft smaller, regional Italian banks like Veneto Banca and Popolare di Vicenza, which are now pleading for a bailout from Rome, which in turn is pleading for clemency from Brussels.

SNIP

[ptsal]

Bookmark bank

[Vince Ferrer]

For the first time since the banking crisis, the U.S. and EU central banks are diverging in policy. The US is raising interest rates, but the EU is going to keep them low. This will cause money to move here.

[datura]

Shhhhh.... Don’t tell that to all of the “the Fed keeps raising the rates against Trump” posters in here. The economy can use some profit in banking again without all of the derivative gimmicks.

[Gene Eric]

>> The economy can use some profit in banking again without all of the derivative gimmicks.

The “derivatives” were a side effect of the degenerate mortgage practices forced by Clinton, Frank, and company.

[grania]

Are these countries bought-and-paid for pols going to wake up while they still have countries to save? Greece, Cyprus, and Italy are on this list. Meanwhile, Germany gets wealthier ever day. What's wrong with this picture?.....these three countries are bearing a whole lot of the burden caused by the refugee crisis.

Germany is winning WW3. Its weapon is the bankers and its troops are bought-and-paid for politicians.