Europe

Legal changes in Spain’s banking system are positive for covered bond holders and time subordination is no longer a factor in Cédulas recoveries, said Fitch in a report published on Friday.

As economic problems persist in Europe, more leaders adopt the coercive, de-motivating leadership style prevalent in emerging markets, a study shows

Net euro denominated covered bond supply has dropped to the lowest level since the euro begun. And with a surfeit of central bank liquidity alongside continued balance sheet shrinkage, this trend looks set to continue, suggesting that the already measly supply forecasts for the year could be revised lower.

Standard & Poor’s brought a ray of sunshine to the world of Cédulas ratings this week, when it upgraded NCG Banco’s bonds because of improvement in the quality and maturity profile of the bank’s loan book.

Since UniCredit’s groundbreaking covered bond deal last year, a plethora of issuers have priced inside their sovereign. This new financial order has led to a re-examination of how covered bonds are priced and whether sovereign risk has much bearing on covered spreads anymore.

Debt levels are too high and rising, while stocks and bonds are priced "dangerously high," economist Andrew Smithers argues

Deutsche Pfandbriefbank (Pbb) launched a €100m three year floating rate Pfandbrief on Tuesday, but syndicate bankers are sceptical that the euro market will manage much more before Easter. The storm around Cyprus may have subsided, but it has reminded issuers how quickly markets can turn and highlighted the value of covered bond collateral.

The irony, for a country committed to prescribing continued austerity in southern Europe, is that Germany probably has an Italian to thank for an economic outlook that is almost impossibly bright.Philip Moore reports.

Nobody would suggest Germany is enjoying its best economic performance, but it remains the outperformer of the eurozone and its most important engine. Chris Wright examines how sustainable this position of strength is.

Germans know the score: they might not want to pay for problems in Europe but the alternative — eurozone break-up — would be far more costly. Meanwhile, the politicians have realised that to preserve the euro, Germany has had to become Europe’s leader — a position that, given the country’s history, makes many citizens uncomfortable. Chris Wright reports.

Heterodoxy is all the rage. Fashion rules. But the world needs the nagging, nurturing, normality of the Bundesbank more than ever before, writes Andrew Capon.

At first glance, German banking is in decent shape. Set within eurozone’s healthiest economy, the country’s three pillar banking system, once condemned as stodgy and old-fashioned, looks a smart way of guaranteeing diversity of lenders and ensuring nationwide coverage. Two pillars (or at least one and a half) are performing strongly, while the third is headed by a genuine national champion. But weak capital, declining margins, higher funding costs, a growing regulatory burden and a hostile political environment cloud an otherwise benign picture, reports Julian Lewis.