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Capital markets players love to talk about being socially responsible. The death of George Floyd shows talk has got society nowhere. It is time for action. -
Deutsche Hypo took advantage of the public Pfandbrief market before the coronavirus crisis struck and since then has been busy issuing privately placed senior deals. Spreads have since tightened, which should help issuance bounce back. But ready access to favourable European Central Bank repo funding means supply will be restricted. Some parts of the German commercial real estate market are likely to be facing trouble too, but even so, Pfandbrief investors are well protected.
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DNB entered 2020 better capitalised than ever, and having taken the opportunity to get ahead with its regulatory funding at the end of last year, it was also better financed than ever. Even so, following the regulator's decision to delay implementation of MREL target by one year, DNB could return to the covered bond market in the latter half of 2020.
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Mediobanca frontloaded regulatory issuance and completed its funding plan before the coronavirus crisis struck. While its corporate loan book has increased, deposit inflows have also improved which means the bank is in no hurry to return to the public market according to head of group treasury, Carlo Masini, and head of funding, Paolo Labbozzetta.
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Bank balance sheets are set to expand and Intesa's will be no exception. It will mean an an increased reliance on central bank funding. But apart from this, the Italian bank's mix of funding is likely to remain unchanged from February with the emphasis on regulatory capital. But as Alessandro Lolli, head of group treasury and finance told GlobalCapital, the bank has great flexibility in navigating its capital raising during the pandemic.
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Unlike many banks, NordLB had been actively reducing its balance sheet well before the coronavirus crisis hit, so its need for funding is more modest than most. Though it seems likely Pfandbrief issuance will eventually return, German borrowers are hesitant to come to market, especially when there is cheap, plentiful central bank funding available. And, while Pfandbrief investors are well protected, it seems likely that a slow recovery in the commercial real estate market and a more questionable outlook for SME lending, will take its toll on lenders’ business models.
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Banks want to position themselves as ahead of the curve on sustainability. They are among the most sophisticated, well resourced, IT-savvy organisations in the world. Why can't they work out the carbon footprints of their portfolios?
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Unlike many other banks, ANZ has had no need to draw on central bank emergency liquidity lines during the coronavirus pandemic. Its risk-weighted assets have grown but this has been offset by greater retail deposits. And, as head of funding Mostyn Kau revealed, what subordinated debt issuance it does have to do will be for regulatory reasons rather than to do with Covid-19 crisis funding.
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Banks should be brave enough to take decisions that upset their additional tier one (AT1) investors.
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UniCredit began the year with a new template for growth but is now simply trying to help support clients through the crisis, while hoping that the deeper relationships being forged will endure, writes David Rothnie.
