Is the liquidity crisis over in Europe?
You would be mistaken for believing that the banking liquidity crisis has come to an end in Europe judging by the bounce in banking share prices yesterday. However, despite the fact that immediate ECB loans were significantly lower than had been feared there is still relatively low liquidity in the traditional money markets and interbank lending is nowhere near as fluid as it should be. So what can we expect in the future?
The European banking system is the key to recovery across Europe and the ECB is well aware of this. However, the decision to terminate the ECB emergency liquidity program has left a potential shortfall in the hundreds of billions of euros. At some stage more banks will need to step forward to refinance their borrowings and improve their liquidity at which point we could see further pressure on the European banking system. As soon as any concerns appear in the marketplace we will see the cost of borrowing spike upwards which can in itself cause more problems and a vicious circle of concern and investment stagnation.
So those who are calling an end to the European banking crisis may well need to think again because we are nowhere near out of the woods!
Share this..
Related stories
BSkyB places 10.4% stake in ITV
As expected, BSkyB has today confirmed the placing of 404.4 million shares in ITV at a price of 48.5p each. This now brings the company's shareholding in ITV down to 7.5%, a figure which the Competition Commission is happy with, although it does crystallise a £348 million loss on the 10.4% share sale. The company has confirmed that the residual 7.5% stake will be held in the medium term for inves...
Read MoreBradford And Bingley Under Pressure From ABI
While the Bradford and Bingley share price had been in freefall prior to the TPG and fund raising announcements, the board are under increasing pressure to open their books to Resolution Group. Clive Cowdrey’s company has been in talks with the board of Bradford and Bingley, on and off, for some time about taking a controlling stake in the group.
However, despite the TPG deal...
FSA to stamp out financial advisers commission
In a move which is set to change the landscape of the whole financial services industry, the Financial Services Authority (FSA) has announced plans to stamp out commission for financial advisers for promoting individual investment products and investment services. Since the very early days of the financial services industry there has been a very close relationship between advisers and investment p...
Read MoreLondon remains Europe's premier investment Centre
For the seventh year in a row, London has retained top spot in the Ernst & Young annual report on Europe's most attractive cities to invest in. This is a welcome boost for the UK government as the report, which surveyed 800 executives around the world, singles out London as one of the best placed cities in the world to rebound from the ongoing economic crisis. This is very much at odds with a numb...
Read MoreJohn Hargreaves bags a £250 million dividend
John Hargreaves, the founder of the Matalan operation, has today announced a £525 million refinancing of the operation which will see him receive a special dividend of £250 million. The remaining £275 million will be reinvested into the company after a recent offer for sale was pulled at the last minute when potential suitors stepped back due to concerns regarding the economy and the short to m...
Read More