Covered Bond Opinion

The suggestion that Bankia hit the ECB’s discount window for capital every three months is laughable. But it shows that if Spain is going to bail out its banks, it needs outside help.

A Roman-tic New Year’s

The appointment of external auditors to look at the strength of Spain’s banks is a welcome development. But it will not necessarily resolve investor frustration at Spain’s softly, softly approach towards cleaning up the banking sector.

Attempts to provide investors with regular, standardised and transparent covered bond collateral information are to be applauded. But a fundamental shift in how Spanish banks collect and report data is needed for prospective Cédulas buyers to benefit.

Standard Chartered’s breaking of the Rmb1bn ($158.2m) barrier in ECP sold out of London may seem like small Tsingtao when compared with the size of the market as a whole. But the speed at which the issuer reached the milestone is testament to the flexibility of the ECP product and its ability to adapt, despite the slings and arrows it has faced over the last five years.

There may be only a month to go before a second Greek default and possible exit from the euro. There may even be less time, if the bleeding of deposits from Greek banks becomes life-threatening, and central banks or the Eurozone rescue mechanisms do not stanch the flow.

Euroblog was delighted to catch up with so many in the market at EuroWeek's bond awards dinner this week. It’s always informative to observe such a group interacting en masse, but this year (and we’re not sure if the different venue was to blame) we couldn’t help wondering if it was a full moon. Bankers across the SSA sector were observed to be behaving rather oddly — or rather their clothes were.

Securitisation was blamed for causing the financial crisis that was triggered in 2007. But the technique must now be recognised for its potential to resuscitate fragile banks.

The effects of JP Morgan’s shock $2bn loss in its Chief Investment Office are likely to be felt far beyond the bank. At the very least, it has shattered an already fragile trust in the industry. It may also be the nail in the coffin for traditional measures of risk.

Euroblog’s readers will need no reminding that these are testing times for the investment banking industry. If regulators aren’t making profit generation more difficult, then economic conditions and, er, Whales are doing a pretty good job of it.