This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
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
The article has changed 20 times. There is an RSS feed of changes available.
| Version 4 | Version 5 |
|---|---|
| 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) | |
| 11.01am BST | |
| 11:01 | |
| 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. | |
| 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 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 | |
| 10:45 | |
| 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). | |
| 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 | |
| Updated | |
| at 10.56am BST | |
| 10.40am BST | |
| 10:40 | |
| Markets take Banco Popular rescue in their stride | |
| Once upon a time, a failing eurozone bank would have sparked mayhem in the financial markets. | |
| Not today, though. The news that Banco Popular has been acquired for one shiny euro by Santander has caused a notable lack of drama. | |
| And that’s because Europe’s bank resolution mechanism is acting like it was meant to. Shareholders in a failed bank have been wiped out, and crucially so have the riskier bondholders. | |
| Various Banco Popular debt instruments have been written down, or converted into equity which was then handed to Santander, as part of today’s deal. | |
| That means that bondholders who took a risk by holding this debt (which offered attractive returns) are suffering losses, rather than the taxpayer. | |
| James Mackintosh of the Wall Street Journal has tweeted the details: | |
| 1. Banco Popular: Mid-sized European bank fails with just a few days' warning, markets don't care. | |
| 2. One reason: senior debt will be paid in full. ECB resolution worked, junior debt wiped out. But almost all POP's debt is covered bonds | |
| 3. Junior debt being wiped out is the orange, purple and green bits on here, totalling ~€2.4bn, about 10% of total bonds issued pic.twitter.com/GGbrM2HJxN | |
| 4. First test of contingent convertible bonds, CoCos, and it's a useful reminder to yield seekers that they come with catastrophe risk | |
| 10.24am BST | 10.24am BST |
| 10:24 | 10:24 |
| The OECD also hiked its growth forecasts for the eurozone and Japan, but didn’t nudge its UK forecasts. | The OECD also hiked its growth forecasts for the eurozone and Japan, but didn’t nudge its UK forecasts. |
| OECD Sees UK Growth Of 1.6 In 2017, 1.0% In 2018 (Both Unchanged) | OECD Sees UK Growth Of 1.6 In 2017, 1.0% In 2018 (Both Unchanged) |
| OECD Sees Japanese Growth Of 1.4% In 2017 (Up From 1.2%), 1.0% In 2018 (Up From 0.8%) | OECD Sees Japanese Growth Of 1.4% In 2017 (Up From 1.2%), 1.0% In 2018 (Up From 0.8%) |
| OECD Sees Euro Zone Growth 1.8% In 2017 And 2018 (Up From 1.6% In 2017 And 2018) | OECD Sees Euro Zone Growth 1.8% In 2017 And 2018 (Up From 1.6% In 2017 And 2018) |
| 10.21am BST | 10.21am BST |
| 10:21 | 10:21 |
| Angel Gurria, head of the OECD, says we shouldn’t get too excited that global growth is heading for a six-year high of 3.5%. | Angel Gurria, head of the OECD, says we shouldn’t get too excited that global growth is heading for a six-year high of 3.5%. |
| He told Reuters that: | He told Reuters that: |
| “Everything is relative. What I would not like us to do is celebrate the fact that we’re moving from very bad to mediocre. | “Everything is relative. What I would not like us to do is celebrate the fact that we’re moving from very bad to mediocre. |
| It doesn’t mean that we have to get used to it or live with it. We have to continue to strive to do better.” | It doesn’t mean that we have to get used to it or live with it. We have to continue to strive to do better.” |
| 10.06am BST | 10.06am BST |
| 10:06 | 10:06 |
| Something to ponder.... | Something to ponder.... |
| The middle-skill trap illustrated. Great chart from the @OECD's new global economic outlook. https://t.co/dZ83Pbtrlg pic.twitter.com/lLh7FGsnDR | The middle-skill trap illustrated. Great chart from the @OECD's new global economic outlook. https://t.co/dZ83Pbtrlg pic.twitter.com/lLh7FGsnDR |
| 10.00am BST | 10.00am BST |
| 10:00 | 10:00 |
| This shows why global growth still isn’t ‘good enough’, in the OECD’s view. | This shows why global growth still isn’t ‘good enough’, in the OECD’s view. |
| 9.49am BST | 9.49am BST |
| 09:49 | 09:49 |
| This chart shows how the OECD expects the global economy to grow faster, but with many of the benefits heading to the richest: | This chart shows how the OECD expects the global economy to grow faster, but with many of the benefits heading to the richest: |
| Global Economic Outlook: Better, but not good enough https://t.co/BKRzFSoTtY pic.twitter.com/ydkf0CPaNU | Global Economic Outlook: Better, but not good enough https://t.co/BKRzFSoTtY pic.twitter.com/ydkf0CPaNU |
| 9.47am BST | 9.47am BST |
| 09:47 | 09:47 |
| OECD raises global growth forecasts, but sees Brexit pain ahead | OECD raises global growth forecasts, but sees Brexit pain ahead |
| The OECD’s latest global economic outlook is just out, and it gives a mixed picture. | The OECD’s latest global economic outlook is just out, and it gives a mixed picture. |
| On the upside, the Paris-based thinktank has hiked its global growth forecast this year to 3.5%, from 3.3% previously. That would be the best performance in six years. | On the upside, the Paris-based thinktank has hiked its global growth forecast this year to 3.5%, from 3.3% previously. That would be the best performance in six years. |
| The OECD sees growth rising further to 3.6% in 2018. | The OECD sees growth rising further to 3.6% in 2018. |
| But it is also concerned by persistent inequality in the global economy, lacklustre wage growth, and signs that the public are losing faith in their governments. | But it is also concerned by persistent inequality in the global economy, lacklustre wage growth, and signs that the public are losing faith in their governments. |
| And it says the outlook is “better, but not good enough”. | And it says the outlook is “better, but not good enough”. |
| OECD: outlook for global economy is 'better, but not good enough' https://t.co/bm0FuYlncc | OECD: outlook for global economy is 'better, but not good enough' https://t.co/bm0FuYlncc |
| The OECD has cut its US growth forecasts, but it now more optimistic about China’s economic prospects. | The OECD has cut its US growth forecasts, but it now more optimistic about China’s economic prospects. |
| OECD Sees Chinese Growth Of 6.6% In 2017 (Up From 6.5%), 6.4% In 2018 (Up From 6.3%) | OECD Sees Chinese Growth Of 6.6% In 2017 (Up From 6.5%), 6.4% In 2018 (Up From 6.3%) |
| OECD: US economy to grow by 2.1% in 2017, down from previous 2.4% estimate. By 2.4% in 2018, down from 2.8% | OECD: US economy to grow by 2.1% in 2017, down from previous 2.4% estimate. By 2.4% in 2018, down from 2.8% |
| My colleague Katie Allen has read the report, and explains: | My colleague Katie Allen has read the report, and explains: |
| The OECD devoted a significant proportion of its latest report to the possible forces behind a backlash against globalisation. That discontent was seen as a key factor behind Donald Trump’s victory in the race for the US presidency, since when he has pledged to put “America first”. Anti-globalisation sentiment also appears to have boosted protectionist politicians in other countries, including France where the far-right candidate Marine Le Pen made it to the final round of the presidential election but lost to the centrist Emmanuel Macron. | The OECD devoted a significant proportion of its latest report to the possible forces behind a backlash against globalisation. That discontent was seen as a key factor behind Donald Trump’s victory in the race for the US presidency, since when he has pledged to put “America first”. Anti-globalisation sentiment also appears to have boosted protectionist politicians in other countries, including France where the far-right candidate Marine Le Pen made it to the final round of the presidential election but lost to the centrist Emmanuel Macron. |
| The OECD said international trade had been a “powerful engine of global economic growth and convergence in living standards between countries” but that despite those gains, the backlash against it had been rising. | The OECD said international trade had been a “powerful engine of global economic growth and convergence in living standards between countries” but that despite those gains, the backlash against it had been rising. |
| 9.33am BST | 9.33am BST |
| 09:33 | 09:33 |
| Readers may remember that Santander has a track record on rescuing ailing and troubled banks, including in the UK. | Readers may remember that Santander has a track record on rescuing ailing and troubled banks, including in the UK. |
| It took over Britain’s Abbey National and Alliance & Leicester before the financial crisis in 2008, and then added Bradford & Bingley savers to its businesses when B&B’s mortgage book was nationalised. | It took over Britain’s Abbey National and Alliance & Leicester before the financial crisis in 2008, and then added Bradford & Bingley savers to its businesses when B&B’s mortgage book was nationalised. |
| 9.24am BST | 9.24am BST |
| 09:24 | 09:24 |
| Santander's Botin: This is really great news | Santander's Botin: This is really great news |
| Santander’s chairman, Ana Botin, has insisted that she came under “absolutely no pressure” from regulators to rescue Banco Popular. | Santander’s chairman, Ana Botin, has insisted that she came under “absolutely no pressure” from regulators to rescue Banco Popular. |
| Speaking on Bloomberg TV, she says | Speaking on Bloomberg TV, she says |
| This is a transaction that is very good for our franchise in Spain and Portugal. It creates the best bank in both markets. | This is a transaction that is very good for our franchise in Spain and Portugal. It creates the best bank in both markets. |
| Botin says that an opportunity arose yesterday to present an offer to the Single Resolution Board, to take over Popular, and she’s impressed by how quickly the rescue was handled. | Botin says that an opportunity arose yesterday to present an offer to the Single Resolution Board, to take over Popular, and she’s impressed by how quickly the rescue was handled. |
| This is really great news for Europe, for the financial system, for Spain, and for Santander’s shareholders. | This is really great news for Europe, for the financial system, for Spain, and for Santander’s shareholders. |
| Botin says that the deal won’t hurt Santander -- it is sticking with all its financial targets for 2017 and 2018, and will be able to improve on its targets from 2019. | Botin says that the deal won’t hurt Santander -- it is sticking with all its financial targets for 2017 and 2018, and will be able to improve on its targets from 2019. |
| The €7bn of fresh capital is coming from a rights issue, she points out, so Santander’s capital reserves won’t be depleted. | The €7bn of fresh capital is coming from a rights issue, she points out, so Santander’s capital reserves won’t be depleted. |
| There’s no word on any potential job cuts or branch closures. Botin says: | There’s no word on any potential job cuts or branch closures. Botin says: |
| We are fully committed to supporting both the team and the customers from today. | We are fully committed to supporting both the team and the customers from today. |
| But what about Popular’s non-performing real estate loans - does Santander really know what it’s taking on? | But what about Popular’s non-performing real estate loans - does Santander really know what it’s taking on? |
| Botin says her staff did have time to do due diligence on Popular’s assets, prior to making its offer. And with Spain’s economy growing strongly, she’s confident this deal will be a success. | Botin says her staff did have time to do due diligence on Popular’s assets, prior to making its offer. And with Spain’s economy growing strongly, she’s confident this deal will be a success. |
| 9.05am BST | 9.05am BST |
| 09:05 | 09:05 |
| SRB: Depositors are being protected | SRB: Depositors are being protected |
| Elke König, chair of Europe’s Single Resolution Board (which triggered Banco Popular’s rescue), says that the deal will protect the bank’s savers. | Elke König, chair of Europe’s Single Resolution Board (which triggered Banco Popular’s rescue), says that the deal will protect the bank’s savers. |
| König also argues that the deal vindicates Europe’s efforts to avoid another financial crisis. | König also argues that the deal vindicates Europe’s efforts to avoid another financial crisis. |
| “The decision taken today safeguards the depositors and critical functions of Banco Popular. | “The decision taken today safeguards the depositors and critical functions of Banco Popular. |
| This shows that the tools given to resolution authorities after the crisis are effective to protect taxpayers’ money from bailing out banks”. | This shows that the tools given to resolution authorities after the crisis are effective to protect taxpayers’ money from bailing out banks”. |
| Here’s the official statement: | Here’s the official statement: |
| The Single Resolution Board adopts resolution decision for Banco Popular | The Single Resolution Board adopts resolution decision for Banco Popular |