The European Central Bank (ECB) has today joined the European Union in pushing for more stress tests for European financial institutions. This is a move which was announced earlier this week and appears to have the backing of all major financial regulators within Europe but could this move do more harm than good?
As the BP oil crisis continues, with more oil gushing from the Gulf of Mexico well, there are growing concerns about the potential liabilities this may create for the company going forward. The cumulative drop in the share price equates to a loss in value for BP of around USD100 million with the potential liability as yet uncapped. So what are the short-term liabilities for BP?
Just yesterday the Bank of England was again suggests that UK banks should increase their capital reserves in readiness for potential problems in the euro zone. This comes on top of plans to increase the safety net between liabilities and assets for the UK banking arena and could in the short-term impact upon dividends for shareholders.
The Bank of England has today highlighted the problems in the euro zone and suggested that UK banks should build their capital reserves for the future. This is not the first time the Bank of England has highlighted the euro zone as a potential problem for the UK banking arena but it would now appear that concerns are more deep-seated. So how would problems in the euro zone impact the UK financial sector?
EU officials will this weekend meet to discuss the details of the forthcoming banking stress test reports which will be announced over the next few weeks. These tests will highlight strength in the European banking system and bring some of the largest names in the financial world into the spotlight. Will these stress test reports help investors?
George Soros, the infamous investor who "broke the Bank of England", has issued a stinging rebuke regarding German economic policy. He believes that Germany has the potential to pull down the Eurozone due to various austerities measures which will, in his opinion, stunt growth in Germany in the short to medium term. If he is correct this will have a massive impact upon the Eurozone as Germany is by far and away the most influential economy in Europe at the moment.
As the Unite union readies its members for a ballot on a third round of strike action there is growing concern about the future shape of British Airways. Despite the fact the company only yesterday announced an agreement with pension trustees regarding the company's liabilities it does seem as though the ongoing strike action will have a massive impact upon the company's finances in the short to medium term. So what can British Airways do to address this issue?
Yesterday's recovery in banking share prices was very much an indication that investors and analysts believe the banking sector has effectively got off easy in George Osborne's first budget. There had been concerns that the UK government would introduce a banking levy to raise around £5 billion a year although in reality the new tax is unlikely to raise any more than £2.5 billion per annum. As a consequence banking share prices rebounded yesterday after an earlier sell off self just ahead of the budget.
The gilt investment market and credit rating agencies have reacted broadly positive after the release of George Osborne's budget today. While initially the yield on the benchmark 10 year gilts fell to 3.4% as the budget speech began, it did increase to 3.45% towards the end of the presentation. While normally an increase in the interest rate on the benchmark 10 year gilt would be taken as a negative sign, many experts believe the good news was already in the price of government gilts.
While the UK stock market is still down over 1% there was a partial recovery after the budget were initial fears of a banking levy proved to be too pessimistic. Analysts had been expecting the introduction of a banking levy to raise between £1 billion and £5 billion a year although the figure came in at around £2 billion. The levy will also take in overseas operators in the UK market as well as those quoted on the stock market, thereby spreading the pain amongst more institutions.
