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The plight of Raiffeisen Bank International has been horrifying and fascinating for the Central and Eastern European loan market over recent months and its disclosure of a big earnings hit will have been watched closely by other western banks with heavy exposure to Russia and Ukraine. But RBI’s problems are its own and do not – yet – suggest a crisis in the Russia business for other lenders. -
A 367 day loan? Could that have been designed to tick a regulatory box? Of course it could. But don’t scoff — banks have always gone right up to the line of compliance — and they always will.
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A 367 day loan? Could that have been designed to tick a regulatory box? Of course it could. But don't scoff - banks have always gone right up to the line of compliance - and they always will.
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Lulled into a false sense of security by the European Central Bank’s quantitative easing programme, investors seem to think they are immune from events in Greece. It’s certainly true that markets are in much better shape than they were when the country was first bailed out in 2010. Investors in AIB Mortgage Bank’s latest deal would probably vouch for that.
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Faced with shrinking yields, covered bond investors have been deserting the market. Unless the ECB moves out of the way and switches to sovereign purchases fast, there is a real risk that these buyers will not be there when the extraordinary stimulus measures now being delivered are taken away.
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European participants in the capital markets are waiting, with bated breath, for Thursday’s European Central Bank meeting and the expected announcement of quantitative easing, as well as the outcome of Greece’s Parliamentary elections on Sunday. But an interesting dynamic has set in around what were once thought to be two of the most important events of the start of 2015: no one seems to care much about either anymore.
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The European Commission wants credit ratings left out of financial regulation — a great move, if it can find something good to replace them. But it’s making the right decision for the wrong reason.
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Perhaps it was stimulus envy — years of taking a back seat in the popular mind to the central banks of the US, the European Union, Japan and the UK.
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The European FIG market got off on the right foot this week, with issuers learning from mistakes made toward the end of 2014 and offering larger premiums to cash-rich and yield-strapped investors that want to put their money to work before yield targets get even harder to hit responsibly.
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On December 30, when most investors were on holiday, Credit Suisse changed the terms of its existing covered bonds from a hard to a soft bullet maturity with the approval of just a few investors. Other issuers looking to change the terms of existing deals should be more upfront about liability management exercises that could put investors at a disadvantage.
