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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/jun/07/santander-banco-popular-rescue-oecd-growth-forecasts-business-live
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| Santander rescues Spain's failing Banco Popular from collapse - business live | Santander rescues Spain's failing Banco Popular from collapse - business live |
| (35 minutes later) | |
| 2.16pm BST | |
| 14:16 | |
| Later come the latest weekly US oil stocks figures from the Energy Information Administration, a day after an industry survey showed a bigger than expected fall. But the worries over the Middle East after the rift between Qatar and other Gulf states has continued to see oil prices slide, and a positive EIA report may have little impact. Craig Erlam, market analyst at Oanda, said: | |
| The only notable data to come today is EIA crude oil inventories which follow an API release on Tuesday that reported a drawdown of 4.62 million barrels. With oil already under pressure as traders appear to question the suitability of the output deal and the latest geopolitical issues in the region weigh, it will be interesting to see whether another large drawdown will offer any support. Having broken below $50 though, Brent continues to look vulnerable to further downside. | |
| 1.54pm BST | 1.54pm BST |
| 13:54 | 13:54 |
| Manuel Lopez, regulation partner at law firm Ashurst in Madrid, has declared that Santander’s rescue of Banco Popular is a “landmark moment”. | Manuel Lopez, regulation partner at law firm Ashurst in Madrid, has declared that Santander’s rescue of Banco Popular is a “landmark moment”. |
| It shows that the Single Resolution Board is determined to resolve failing banks, without involving state money, he says. | It shows that the Single Resolution Board is determined to resolve failing banks, without involving state money, he says. |
| This signals that SRB and other EU regulators will take major steps to ensure that taxpayers don’t bear the cost of bank failures – and that they won’t wait until the situation deteriorates too far before doing so. | This signals that SRB and other EU regulators will take major steps to ensure that taxpayers don’t bear the cost of bank failures – and that they won’t wait until the situation deteriorates too far before doing so. |
| The shareholders of Popular have seen, overnight, the results of the lessons learned in 2008. This will not be the last such case, and investors will certainly study the result and the financial consequences of this important decision.” | The shareholders of Popular have seen, overnight, the results of the lessons learned in 2008. This will not be the last such case, and investors will certainly study the result and the financial consequences of this important decision.” |
| Updated | Updated |
| at 1.55pm BST | at 1.55pm BST |
| 1.34pm BST | 1.34pm BST |
| 13:34 | 13:34 |
| Britain’s top advertising magnate, Sir Martin Sorrell, received a rough ride from shareholders today over his pay package, and his own future. | Britain’s top advertising magnate, Sir Martin Sorrell, received a rough ride from shareholders today over his pay package, and his own future. |
| One fifth of WPP shareholders refused to back Sorrell’s latest bumper pay deal, worth £48m, even though the company has tightened its remuneration policy after earlier protests. | One fifth of WPP shareholders refused to back Sorrell’s latest bumper pay deal, worth £48m, even though the company has tightened its remuneration policy after earlier protests. |
| Investors also demanded more action on a succession plan for life after Sorrell, who is 76, especially as either side can end his contract with no notice. | Investors also demanded more action on a succession plan for life after Sorrell, who is 76, especially as either side can end his contract with no notice. |
| 1.16pm BST | 1.16pm BST |
| 13:16 | 13:16 |
| Businesses who are fretting about the election could consider protecting themselves against the pound suffering wild swings when the results come in. | Businesses who are fretting about the election could consider protecting themselves against the pound suffering wild swings when the results come in. |
| Roy Williams, managing director at supply chain firm, Vendigital, explains why sterling volatility could be a problem. | Roy Williams, managing director at supply chain firm, Vendigital, explains why sterling volatility could be a problem. |
| “It’s never too late for businesses to hedge against unpleasant currency-related post-Election surprises. | “It’s never too late for businesses to hedge against unpleasant currency-related post-Election surprises. |
| “The currency markets appear to be banking on a Tory win but the polls are more ambivalent. Businesses operating on low margins with significant imports or exports should consider a late hedge to protect their trading position from exchange rate volatility in the immediate aftermath of the General Election. | “The currency markets appear to be banking on a Tory win but the polls are more ambivalent. Businesses operating on low margins with significant imports or exports should consider a late hedge to protect their trading position from exchange rate volatility in the immediate aftermath of the General Election. |
| “Prior to deciding what to do, businesses need to understand if they are a net importer or exporter to each of their various markets. For manufacturers that are net exporters for example, it would be worth considering locking in their exchange rate for a fixed period of time as part of a bank agreement. This will at least allow them a period of financial certainty to plan against. | “Prior to deciding what to do, businesses need to understand if they are a net importer or exporter to each of their various markets. For manufacturers that are net exporters for example, it would be worth considering locking in their exchange rate for a fixed period of time as part of a bank agreement. This will at least allow them a period of financial certainty to plan against. |
| Another option is to line up suppliers in different regions, to give flexibility depending how the foreign exchange markets move, Williams adds. | Another option is to line up suppliers in different regions, to give flexibility depending how the foreign exchange markets move, Williams adds. |
| 12.44pm BST | 12.44pm BST |
| 12:44 | 12:44 |
| UBS Wealth Management have fired over some analysis of how the financial markets will respond to the result of tomorrow’s general election: | UBS Wealth Management have fired over some analysis of how the financial markets will respond to the result of tomorrow’s general election: |
| None of their scenarios sound particularly appealing, frankly, but here goes.... | None of their scenarios sound particularly appealing, frankly, but here goes.... |
| Conservative enhanced majority | Conservative enhanced majority |
| Back to business as usual for government. | Back to business as usual for government. |
| Established trends of rising inflation and weak growth in household incomes unlikely to change, weighing on growth in coming quarters. | Established trends of rising inflation and weak growth in household incomes unlikely to change, weighing on growth in coming quarters. |
| Conservative majority, in the case of less than stellar performance | Conservative majority, in the case of less than stellar performance |
| Prime Minister beholden to backbenchers in her party who favour a swift exit and hard Brexit. | Prime Minister beholden to backbenchers in her party who favour a swift exit and hard Brexit. |
| Less likely to see a transition deal. | Less likely to see a transition deal. |
| This results in sharp slowdown in growth as trade falters. | This results in sharp slowdown in growth as trade falters. |
| Firms shift investment from the UK into the EU. | Firms shift investment from the UK into the EU. |
| Labour-led minority government | Labour-led minority government |
| Complete change of economic programme for the UK. Domestic policy takes a backseat amid Brexit negotiations, with lack of clarity over which aspects of Labour’s proposals will be implemented. | Complete change of economic programme for the UK. Domestic policy takes a backseat amid Brexit negotiations, with lack of clarity over which aspects of Labour’s proposals will be implemented. |
| Sharp drop in business and consumer confidence amid prospect of unstable coalition, muddled Brexit stance, and higher corporate and business taxes. | Sharp drop in business and consumer confidence amid prospect of unstable coalition, muddled Brexit stance, and higher corporate and business taxes. |
| Downside risks to already below-consensus estimates of 1.4% GDP growth for this year and 0.7% for next. | Downside risks to already below-consensus estimates of 1.4% GDP growth for this year and 0.7% for next. |
| 12.24pm BST | 12.24pm BST |
| 12:24 | 12:24 |
| Sterling subdued ahead of election storm | Sterling subdued ahead of election storm |
| The pound has done its best impression of a somnolent sloth this morning. | The pound has done its best impression of a somnolent sloth this morning. |
| Sterling is unchanged on the day, at $1.2907, on the final trading session before Britons trudge to the polls to elect our next government. | Sterling is unchanged on the day, at $1.2907, on the final trading session before Britons trudge to the polls to elect our next government. |
| Traders are eager to find out which (if any) of the rival opinion polls have actually predicted the result correctly. The pound could rally if Theresa May gets an increased majority, but likely slide if the PM manages to actually lose seats. | Traders are eager to find out which (if any) of the rival opinion polls have actually predicted the result correctly. The pound could rally if Theresa May gets an increased majority, but likely slide if the PM manages to actually lose seats. |
| Paresh Davdra of RationalFX says: | Paresh Davdra of RationalFX says: |
| “The pound has remained steady on the eve of the general election. As campaigning reaches its climax, the pound has retreated slightly from the two-week highs seen yesterday but remains stable, as analysts await the election results. | “The pound has remained steady on the eve of the general election. As campaigning reaches its climax, the pound has retreated slightly from the two-week highs seen yesterday but remains stable, as analysts await the election results. |
| The markets are positive about the prospects of Prime Minster Theresa May emerging the winner of tomorrow’s vote, as current polls indicate a secure lead for the Conservatives. However, there is still caution over the remote possibility of a hung parliament or a Labour victory, which investors fear would sink the pound in the aftermath of the election. | The markets are positive about the prospects of Prime Minster Theresa May emerging the winner of tomorrow’s vote, as current polls indicate a secure lead for the Conservatives. However, there is still caution over the remote possibility of a hung parliament or a Labour victory, which investors fear would sink the pound in the aftermath of the election. |
| 12.06pm BST | 12.06pm BST |
| 12:06 | 12:06 |
| Most European stock markets have crept a little high this morning, as traders enjoy a quiet day ahead of tomorrow’s excitement. | Most European stock markets have crept a little high this morning, as traders enjoy a quiet day ahead of tomorrow’s excitement. |
| Spain’s IBEX is lagging behind, with Banco Santander down 2% following its plan to raise €7bn in new capital to cover Banco Popular’s non-performing assets. | Spain’s IBEX is lagging behind, with Banco Santander down 2% following its plan to raise €7bn in new capital to cover Banco Popular’s non-performing assets. |
| Thursday will include Britain’s general election, a European Central Bank meeting, and ex-FBI chief James Comey testifying to Congress. | Thursday will include Britain’s general election, a European Central Bank meeting, and ex-FBI chief James Comey testifying to Congress. |
| Craig Erlam, senior market analyst at OANDA, says: | Craig Erlam, senior market analyst at OANDA, says: |
| We’re seeing mild gains in the FTSE in what is otherwise a mixed European session this morning. US futures are pointing a little higher ahead of the open, with little direction coming from across the pond. | We’re seeing mild gains in the FTSE in what is otherwise a mixed European session this morning. US futures are pointing a little higher ahead of the open, with little direction coming from across the pond. |
| The UK index has stabilised in the weeks leading up to the election, with the sudden uncertainty around the outcome appearing to be contributing to the moves. | The UK index has stabilised in the weeks leading up to the election, with the sudden uncertainty around the outcome appearing to be contributing to the moves. |
| 11.31am BST | 11.31am BST |
| 11:31 | 11:31 |
| There’s suddenly some drama in the markets, as the euro slides to a four-day low. | There’s suddenly some drama in the markets, as the euro slides to a four-day low. |
| The single currency shed half a cent to $1.122 after Bloomberg reported that the ECB is preparing to cut its inflation forecasts. | The single currency shed half a cent to $1.122 after Bloomberg reported that the ECB is preparing to cut its inflation forecasts. |
| The ECB is getting ready to cut its inflation outlook through 2019, according to Bloomberg reports. #Euro hit across the board | The ECB is getting ready to cut its inflation outlook through 2019, according to Bloomberg reports. #Euro hit across the board |
| Government bond prices are also jumping, pushing down the yield (interest rate) on that debt. | Government bond prices are also jumping, pushing down the yield (interest rate) on that debt. |
| Lower inflation forecasts means less chance of the ECB tightening monetary policy soon, and unwinding its huge bond purchase scheme. | Lower inflation forecasts means less chance of the ECB tightening monetary policy soon, and unwinding its huge bond purchase scheme. |
| Bond #yields fall after @business reports #ECB will lower #inflation forecasts! pic.twitter.com/AimzuKHoAh | Bond #yields fall after @business reports #ECB will lower #inflation forecasts! pic.twitter.com/AimzuKHoAh |
| 11.12am BST | 11.12am BST |
| 11:12 | 11:12 |
| The Financial Times also argue that the Banco Popular bailout has bolstered the credibility of Europe’s banking sector. | The Financial Times also argue that the Banco Popular bailout has bolstered the credibility of Europe’s banking sector. |
| Their Madrid bureau chief Tobias Buck writes: | Their Madrid bureau chief Tobias Buck writes: |
| Analysts said that the ability of eurozone authorities to decisively step in to wind down Popular and safeguard its assets gives the EU regime new credibility after questions were raised during the tortuous struggle to clean up Italy’s troubled banks. | Analysts said that the ability of eurozone authorities to decisively step in to wind down Popular and safeguard its assets gives the EU regime new credibility after questions were raised during the tortuous struggle to clean up Italy’s troubled banks. |
| “It’s essentially a case of the regulation doing exactly what it was created for,” said Laurent Frings, head of credit research at Aberdeen Asset Management. “But it does show that there is real risk in investing in these second tier names in the banking sector. | “It’s essentially a case of the regulation doing exactly what it was created for,” said Laurent Frings, head of credit research at Aberdeen Asset Management. “But it does show that there is real risk in investing in these second tier names in the banking sector. |
| V good summary of the Banco Popular story by @TobiasBuckFT. Overall very positive for credibility of #BankingUnion. https://t.co/Z3zmAnmU4p | V good summary of the Banco Popular story by @TobiasBuckFT. Overall very positive for credibility of #BankingUnion. https://t.co/Z3zmAnmU4p |
| Updated | Updated |
| at 11.14am BST | at 11.14am BST |
| 11.01am BST | 11.01am BST |
| 11:01 | 11:01 |
| The rescue of Banco Popular means that attention will now turn to Italy’s financial sector. | The rescue of Banco Popular means that attention will now turn to Italy’s financial sector. |
| Some analysts are speculating on whether any Italian banks will fall into Europe’s resolution mechanism, as some regional lenders are struggling to raise fresh capital. | Some analysts are speculating on whether any Italian banks will fall into Europe’s resolution mechanism, as some regional lenders are struggling to raise fresh capital. |
| Analysts at ABN Amro, though, fear that some Italian banks aren’t as attractive as Popular. | Analysts at ABN Amro, though, fear that some Italian banks aren’t as attractive as Popular. |
| The deal is facilitated by the fact that Banco Popular is actually strong enough to have buyers. Especially their loan book, and diversification to Portugal was of interest. Crucially, the deal could be performed without the need for state assistance. However, in Italy, the banks of Veneto and Vicenza are not in the equivalent balance sheet position as the Banco Popular. It would seem that the large institutions in Italy would be unwilling to take over the banks without the interaction of the Italian state, either via the Atlante fund or another mechanism. | The deal is facilitated by the fact that Banco Popular is actually strong enough to have buyers. Especially their loan book, and diversification to Portugal was of interest. Crucially, the deal could be performed without the need for state assistance. However, in Italy, the banks of Veneto and Vicenza are not in the equivalent balance sheet position as the Banco Popular. It would seem that the large institutions in Italy would be unwilling to take over the banks without the interaction of the Italian state, either via the Atlante fund or another mechanism. |
| The question now is, if Banco Popular has now been stated as ‘failing or likely to fail’ by the SRB, what does this mean for the arguably weaker banks of Veneto and Vicenza banks | The question now is, if Banco Popular has now been stated as ‘failing or likely to fail’ by the SRB, what does this mean for the arguably weaker banks of Veneto and Vicenza banks |
| 10.45am BST | 10.45am BST |
| 10:45 | 10:45 |
| This chart, from M&S’s Bond Vigilantes team, shows how Banco Popular’s risky bonds have been wiped out by today’s deal (the orange line). | This chart, from M&S’s Bond Vigilantes team, shows how Banco Popular’s risky bonds have been wiped out by today’s deal (the orange line). |
| But senior debt (which is further down the pecking order when a company fails) is not being ‘bailed-in’ to today’s rescue, so its value has actually risen. | But senior debt (which is further down the pecking order when a company fails) is not being ‘bailed-in’ to today’s rescue, so its value has actually risen. |
| Banco Popular to be sold to Santander. AT1 collapses by 90%, senior debt rallies. Not all debt created equal. pic.twitter.com/TAZAjBRv9T | Banco Popular to be sold to Santander. AT1 collapses by 90%, senior debt rallies. Not all debt created equal. pic.twitter.com/TAZAjBRv9T |
| Updated | Updated |
| at 10.56am BST | at 10.56am BST |