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The Libor scandal raises scores of questions about the state of the banking industry and its regulatory watchdogs. But above all it has highlighted the futility of any attempt to grasp the full mechanics of complex modern banks. Gary Jenkins reckons the only solution is a total reimagining of what the sector should look like.
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The UK’s latest scheme to stimulate the economy, Funding for Lending, has been greeted with an almost audible weary sigh from the market. It should reduce loan funding costs appreciably, which can only help the economy. Whether it unlocks loans for borrowers who can’t get them already is much less certain.
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Aircraft Pfandbriefe raise uncomfortable questions about what is a covered bond. In doing so, they risk jeopardising the regulatory esteem in which the asset class is held.
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After Libor fiddling and swap mis-selling, many are saying investment banks have no place in the commercial banks’ state-protected tent. The middle of a government debt crisis is not the best time to re-open this debate. But sooner or later, the ghosts will have to be faced.
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The top four UK banks are in trouble again, for possible mis-sales of swaps to SMEs. Saying it was a one-off will not do any more. The drive for high profits will always lead to abuses. Tough regulation will be necessary — but the banking model needs to change.
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Analysts have been quick to hit out at Spain's bank stress test results last week, telling anyone who will listen that the 6% core tier one target under the stressed scenario will not give confidence. But the market should remember how far it has come on capital.
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There is a new boy band set to hit the airwaves, called the EM Syndicate Managers, don’t you know. The revelation came from one of the strapping young lads seen in a photo sent to EuroWeek featuring three of EM’s finest in a very boyband pose.
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Despite long being lauded as one of the very few effective private sector solutions for wholesale mortgage funding, covered bonds are not quite so divorced from the state as they might seem. Strong implied state support is clear in the most longstanding regime — a pattern that is likely to be replicated in others.
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The UK government’s new liquidity scheme will do no harm. But nor is it likely to stimulate much economic growth.
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When a crisis looks like it is approaching its peak, a bit of solidarity never goes amiss. The sight this week of François Hollande standing alongside Mario Monti in a joint call for growth-promoting policies to balance the austerity drive might have well have rankled in Berlin, particularly as common eurozone bonds were also on their agenda.