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Eurozone crisis live: Spanish banks must find another €30bn to cover bad loans Eurozone crisis live: Spanish banks must find another €30bn to cover bad loans
(40 minutes later)
4.11pm: Here's some reaction to the Spanish banking annoucements. Giles Tremlett writes:
Spain's banking reform gets a qualified thumbs-up from Nicholas Spiro of Spiro Sovereign Strategy, but he also says this is not the definitive clean-up that markets wanted.
"It's a significant step in the right direction, particularly the approval of an independent audit, and provides a measure of reassurance that Spain is coming to grips with its banking troubles.
It's very difficult for the Rajoy government to stop the rot when Spain's economy continues to deteriorate and the eurozone crisis is flaring up again.
Spanish bank restructuring is a moving target: the deeper the economic downturn, the greater the uncertainty about the size of the sector's provisioning needs.
It needs a shock-and-awe-type programme to restore confidence in Spanish banks. But this would require some form of external assistance."
3.57pm: Meanwhile, says Helena, the likelihood of a fresh round of Greek elections – probably on June 17 – has increased dramatically over the course of the day. And outgoing prime minister Lucas Papademos looks unlikely to stay on for that. Helena writes:3.57pm: Meanwhile, says Helena, the likelihood of a fresh round of Greek elections – probably on June 17 – has increased dramatically over the course of the day. And outgoing prime minister Lucas Papademos looks unlikely to stay on for that. Helena writes:
Almost every official in every camp I have spoken with today is speaking of new elections as a "99%" certainty given Greece's post-electoral impasse. One insider thought the new poll would be announced by mid-week next week.Almost every official in every camp I have spoken with today is speaking of new elections as a "99%" certainty given Greece's post-electoral impasse. One insider thought the new poll would be announced by mid-week next week.
The new ballot would mean Greece's 300-seat parliament having to be dissolved. A caretaker government would take over. My contacts have just assured me that the outgoing prime minister Lucas Papademos would not be willing to stay on as head of such an administration. "That will not be happening," said one well-placed source. "The decision has been made."The new ballot would mean Greece's 300-seat parliament having to be dissolved. A caretaker government would take over. My contacts have just assured me that the outgoing prime minister Lucas Papademos would not be willing to stay on as head of such an administration. "That will not be happening," said one well-placed source. "The decision has been made."
For some time, aides close to Papademos have spoken of the technocrat prime minister's desire to return to academia. A post is waiting for him at Harvard University's JFK school of governance where the macro-economist was teaching before he was unexpectedly called back to Greece following former prime minister George papandreou's decision to step aside in favour of a multi-party coalition that could lead Greece through its worse crisis in modern times.For some time, aides close to Papademos have spoken of the technocrat prime minister's desire to return to academia. A post is waiting for him at Harvard University's JFK school of governance where the macro-economist was teaching before he was unexpectedly called back to Greece following former prime minister George papandreou's decision to step aside in favour of a multi-party coalition that could lead Greece through its worse crisis in modern times.
3.53pm: The political tumoil gripping Greece is causing growing anxiety among finance ministry officials, says Helena Smith our correspondent in Athens. Helena writes:3.53pm: The political tumoil gripping Greece is causing growing anxiety among finance ministry officials, says Helena Smith our correspondent in Athens. Helena writes:
In the five days since the election, Greece's economic woes are being exacerbated by a precipitous drop in revenues. The debt-stricken country's state TV channel, NET, reported today that the state tax collection mechanism had been badly affected by the turmoil with public revenues falling from an average €40m per day to less than €25m. "It is indicative that after the [May 6] elections daily tax income is 28 % lower than in the first days of May and 38 % lower compared to the same period in 2011," wrote the authoritative Kathimerini also expressing alarm at the free-fall. "Finance ministry officials are hoping that with tax deadlines looming the picture will improve by the end of the month."In the five days since the election, Greece's economic woes are being exacerbated by a precipitous drop in revenues. The debt-stricken country's state TV channel, NET, reported today that the state tax collection mechanism had been badly affected by the turmoil with public revenues falling from an average €40m per day to less than €25m. "It is indicative that after the [May 6] elections daily tax income is 28 % lower than in the first days of May and 38 % lower compared to the same period in 2011," wrote the authoritative Kathimerini also expressing alarm at the free-fall. "Finance ministry officials are hoping that with tax deadlines looming the picture will improve by the end of the month."
A series of pending deadlines have added to the growing sense of urgency in Athens. The debt-stricken nation has enough money to survive until the end of June but by May 15 it must repay €450 million in maturing debt – a decision that must it appears now be taken by a government that in theory no longer has a political mandate.A series of pending deadlines have added to the growing sense of urgency in Athens. The debt-stricken nation has enough money to survive until the end of June but by May 15 it must repay €450 million in maturing debt – a decision that must it appears now be taken by a government that in theory no longer has a political mandate.
The problem is that going prime minister Lucas Papademos, a technocrat and former vice president of the European Central Bank, stepped down along with cabinet members last week – although their resignations will only be formally accepted when a new government is formed. Helena says:The problem is that going prime minister Lucas Papademos, a technocrat and former vice president of the European Central Bank, stepped down along with cabinet members last week – although their resignations will only be formally accepted when a new government is formed. Helena says:
My sources say that for the past few days government lawyers have been trying to work their way around the problem. "It's a simple decision but one that if not taken will have grave consequences," said an insider adding that Greece would be deemed to have defaulted if it did not make the debt repayment.My sources say that for the past few days government lawyers have been trying to work their way around the problem. "It's a simple decision but one that if not taken will have grave consequences," said an insider adding that Greece would be deemed to have defaulted if it did not make the debt repayment.
With declining revenues the cash-starved state could face a credit crunch if the political uncertainty continues. Alarm over Greece's finances – reinforced by today's European Commission announcement that the recession-hit country's growth will remain at zero levels through 2013 – has intensified following the decision of Athens' troika of creditors [the EU/IMF/ECB] to withhold €1bn of the €5.3bn euro tranche of aid destined for Greece this week.With declining revenues the cash-starved state could face a credit crunch if the political uncertainty continues. Alarm over Greece's finances – reinforced by today's European Commission announcement that the recession-hit country's growth will remain at zero levels through 2013 – has intensified following the decision of Athens' troika of creditors [the EU/IMF/ECB] to withhold €1bn of the €5.3bn euro tranche of aid destined for Greece this week.
3.36pm: Here's some more from Giles Tremlett in Madrid on the proposed restructuring of the Spanish banking system:3.36pm: Here's some more from Giles Tremlett in Madrid on the proposed restructuring of the Spanish banking system:

Spain's banks must segregate their foreclosed assets (in other words repossessed homes or finished apartment blocks and building land taken from speculators and developers) and place them into separate, independent companies.
Spain's banks must segregate their foreclosed assets (in other words repossessed homes or finished apartment blocks and building land taken from speculators and developers) and place them into separate, independent companies.
The aim is to make their real estate assets even more visible, but also allow them to be sold off more easily.The aim is to make their real estate assets even more visible, but also allow them to be sold off more easily.
Two independent valuations of the entire asset portfolio (not just property, as we reported earlier in this blog) held by Spanish banks are designed to help that process.Two independent valuations of the entire asset portfolio (not just property, as we reported earlier in this blog) held by Spanish banks are designed to help that process.
Banks have until June 11 to tell the Bank of Spain how they will set aside their share of the extra €30bn in provisions – which are designed to cover real estate loans and assets that are not currently a problem but which might become so in the future.Banks have until June 11 to tell the Bank of Spain how they will set aside their share of the extra €30bn in provisions – which are designed to cover real estate loans and assets that are not currently a problem but which might become so in the future.
Finance minister Luis de Guindos expects some banks to request extra financing from the FROB restructuring fund - but says they will need less than €15bn.Finance minister Luis de Guindos expects some banks to request extra financing from the FROB restructuring fund - but says they will need less than €15bn.
The provisions will cover building land, real estate construction projects and finished developments. Estimates of the number of unsold new homes on the Spanish market currently go as high as 700,000.The provisions will cover building land, real estate construction projects and finished developments. Estimates of the number of unsold new homes on the Spanish market currently go as high as 700,000.
Giles says that according to finance ministry sources, these provisions do not cover mortgages:Giles says that according to finance ministry sources, these provisions do not cover mortgages:
Spain, in other words, has run into trouble because of the dealings between banks, construction companies and developers. Mortgage-holders are not a big problem, or not yet. So blame falls on bankers and business folk rather than ordinary Spaniards living beyond their means.Spain, in other words, has run into trouble because of the dealings between banks, construction companies and developers. Mortgage-holders are not a big problem, or not yet. So blame falls on bankers and business folk rather than ordinary Spaniards living beyond their means.
The new provisions take overall coverage to a generous-sounding 45% of the loan portfolio to real estate developments, but the central bank has warned that 60% of the €307bn portfolio is "problematic".The new provisions take overall coverage to a generous-sounding 45% of the loan portfolio to real estate developments, but the central bank has warned that 60% of the €307bn portfolio is "problematic".
And he points out, all this raised some questions about the Bank of Spain:And he points out, all this raised some questions about the Bank of Spain:
Why did the Bank let this happen? And why has it taken four years since the housing bubble imploded to get to this stage? De Guindos made a vigorous defence of the central bank today, but also spoke of it "recovering its prestige". Presumably he thinks that has been temporarily lost.Why did the Bank let this happen? And why has it taken four years since the housing bubble imploded to get to this stage? De Guindos made a vigorous defence of the central bank today, but also spoke of it "recovering its prestige". Presumably he thinks that has been temporarily lost.
3.15pm: Despite denials about Spain needing a bailout, the cost of insuring against a default continues to rise:3.15pm: Despite denials about Spain needing a bailout, the cost of insuring against a default continues to rise:
#Spain default protection costs rise to fresh record high: 5-yr CDS at new intraday record of 521 bps, 5-yr CDS 11 bps wider vs Thur -Markit#Spain default protection costs rise to fresh record high: 5-yr CDS at new intraday record of 521 bps, 5-yr CDS 11 bps wider vs Thur -Markit
— DJ FX Trader (@djfxtrader) May 11, 2012— DJ FX Trader (@djfxtrader) May 11, 2012
3.06pm: Time for a bit of light in all the gloom. US consumer confidence figures have come in above expectations, with Americans seemingly upbeat about the jobs market.3.06pm: Time for a bit of light in all the gloom. US consumer confidence figures have come in above expectations, with Americans seemingly upbeat about the jobs market.
The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.8 in May, better than forecasts of 76.2 and the highest level since January 2008. Annalisa Piazza at Newedge Strategy said:The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.8 in May, better than forecasts of 76.2 and the highest level since January 2008. Annalisa Piazza at Newedge Strategy said:
The upward movement is encouraging, given that the latest non-farm payroll figures came in lower than expected. On the other hand, lower gasoline prices (and inflation) might explain the monthly increase as US households see some improvement in their disposable income.The upward movement is encouraging, given that the latest non-farm payroll figures came in lower than expected. On the other hand, lower gasoline prices (and inflation) might explain the monthly increase as US households see some improvement in their disposable income.
Earlier producer price inflation fell by 0.2% month on month, better than expections of a flat reading.Earlier producer price inflation fell by 0.2% month on month, better than expections of a flat reading.
So despite the Spanish bank crisis, JP Morgan's horrendous loss, a slowdown in China, and Greece being unable to form a government, markets are starting to come off their worst levels.So despite the Spanish bank crisis, JP Morgan's horrendous loss, a slowdown in China, and Greece being unable to form a government, markets are starting to come off their worst levels.
The Dow Jones Industrial Average is down aorund 10 points in early trading, the FTSE 100 is up around 2 points at 5545 after earlier dropping to 5499 and even Spain's Ibex - off by 3% at one point - is now down only 1.7%The Dow Jones Industrial Average is down aorund 10 points in early trading, the FTSE 100 is up around 2 points at 5545 after earlier dropping to 5499 and even Spain's Ibex - off by 3% at one point - is now down only 1.7%
2.57pm: Ratings agency Fitch has joined the ranks of those now expecting a new Greek election in June, with a growing risk of the country leaving the eurozone. In a statement Fitch said:2.57pm: Ratings agency Fitch has joined the ranks of those now expecting a new Greek election in June, with a growing risk of the country leaving the eurozone. In a statement Fitch said:
The election or formation of a Greek government unwilling or unable to abide by the terms of the current EU-IMF programme would increase the risk of Greece leaving the eurozone. If they are required, the re-run elections will therefore be a critical event for both Greece and for the eurozone.The election or formation of a Greek government unwilling or unable to abide by the terms of the current EU-IMF programme would increase the risk of Greece leaving the eurozone. If they are required, the re-run elections will therefore be a critical event for both Greece and for the eurozone.
The implications for the eurozone of a Greek exit are highly uncertain and would depend on how it happens and the European policy response.The implications for the eurozone of a Greek exit are highly uncertain and would depend on how it happens and the European policy response.
In the near-term, new elections in June would make it doubtful that Greece could comply with the EU-IMF's end-June deadline to propose further medium-term austerity measures worth 5.5% of GDP, although we would expect Greece to be granted an extension to that deadline. However, we think any attempt by Greece to significantly renegotiate its agreed consolidation and reform programme (to which both Pasok and New Democracy are committed) would be unacceptable to the Troika of the ECB, Eurogroup and IMF, who appear unwilling to countenance a significant easing of the programme or any increase in funding.In the near-term, new elections in June would make it doubtful that Greece could comply with the EU-IMF's end-June deadline to propose further medium-term austerity measures worth 5.5% of GDP, although we would expect Greece to be granted an extension to that deadline. However, we think any attempt by Greece to significantly renegotiate its agreed consolidation and reform programme (to which both Pasok and New Democracy are committed) would be unacceptable to the Troika of the ECB, Eurogroup and IMF, who appear unwilling to countenance a significant easing of the programme or any increase in funding.

Fitch repeated that if Greece did leave the eurozone it would be likely to put the sovereign ratings of all the remaining eurozone member states on negative rating watch as it re-assessed the implications of a Greek exit.
Fitch repeated that if Greece did leave the eurozone it would be likely to put the sovereign ratings of all the remaining eurozone member states on negative rating watch as it re-assessed the implications of a Greek exit.
Meanwhile Dutch prime minister Mark Rutte is sticking to the line that the policy is to keep Greece in the eurozone, but says it would not fall apart if the country did leave.Meanwhile Dutch prime minister Mark Rutte is sticking to the line that the policy is to keep Greece in the eurozone, but says it would not fall apart if the country did leave.
2.14pm: Still on Spain and time to recap on the main points of the bank reforms:2.14pm: Still on Spain and time to recap on the main points of the bank reforms:
1. There will be two separate independent valuations of the banks' property portfolios1. There will be two separate independent valuations of the banks' property portfolios
2. Banks must stump up another €30bn to cover bad loans2. Banks must stump up another €30bn to cover bad loans
3. They can borrow from the government at 10% to raise the cash but they can be converted into shares if they cannot be repaid ie nationalisation3. They can borrow from the government at 10% to raise the cash but they can be converted into shares if they cannot be repaid ie nationalisation
And with that I'm handing over to my colleague Nick Fletcher.And with that I'm handing over to my colleague Nick Fletcher.
2.04pm: The Spanish stock market is in freefall after the Spanish government outlined the banking reforms.2.04pm: The Spanish stock market is in freefall after the Spanish government outlined the banking reforms.
The Ibex has fallen 217 points, or nearly 3.1%, since the cabinet press conference. the French Cac has followed, down 1.5% and the Dax has also nosedived to almost 1% down.The Ibex has fallen 217 points, or nearly 3.1%, since the cabinet press conference. the French Cac has followed, down 1.5% and the Dax has also nosedived to almost 1% down.
1.56pm: In cheerier news, Ireland has come out of the grim EC forecasts with a better outlook than others.1.56pm: In cheerier news, Ireland has come out of the grim EC forecasts with a better outlook than others.
Our Dublin correspondent Henry McDonald says that the figures saying Ireland's economy will grow by 0.55 this year and 1.9% next will give a boost to Taoiseach Enda Kenny and his allies as they try to secure a Yes vote in May 31's referendum on the EU fiscal treaty. Henry writes:Our Dublin correspondent Henry McDonald says that the figures saying Ireland's economy will grow by 0.55 this year and 1.9% next will give a boost to Taoiseach Enda Kenny and his allies as they try to secure a Yes vote in May 31's referendum on the EU fiscal treaty. Henry writes:
Among civic and business groups to come out in favour of a Yes vote are the Industrial Development Authority - the body that has been successful in attracting multi-national export driven big pharma and other firms to Ireland over the last 40 years.Among civic and business groups to come out in favour of a Yes vote are the Industrial Development Authority - the body that has been successful in attracting multi-national export driven big pharma and other firms to Ireland over the last 40 years.
We don't know if Ireland's prime minister is a betting man but he has also
received a boost from the Irish Thorough Breeders Association today. They and the Irish Thorough Bred Marketing have called for a Yes vote to keep Ireland inside the eurozone.		We don't know if Ireland's prime minister is a betting man but he has also
received a boost from the Irish Thorough Breeders Association today. They and the Irish Thorough Bred Marketing have called for a Yes vote to keep Ireland inside the eurozone.
Nothing though is guaranteed for the coalition with opponents of the EU Treaty exploiting public anger about domestic issues. The No camp's message is encapsulated in one poster outside Dublin's Connolly railway station this morning. It is from Socialist Party MEP Paul Murphy who urges the electorate to vote against water and new household charges as part of the protests Europe wide against austerity.Nothing though is guaranteed for the coalition with opponents of the EU Treaty exploiting public anger about domestic issues. The No camp's message is encapsulated in one poster outside Dublin's Connolly railway station this morning. It is from Socialist Party MEP Paul Murphy who urges the electorate to vote against water and new household charges as part of the protests Europe wide against austerity.
1.50pm: De Guindos is still going:1.50pm: De Guindos is still going:
He believes the cost to Spain's bank restructuring fund of helping out banks that cannot come up with the new provisions will be less than €15bn euros. Loans wil be for up to five years, but can be converted into shares (i.e. part nationalisation) if the banks fail to pay them back.He believes the cost to Spain's bank restructuring fund of helping out banks that cannot come up with the new provisions will be less than €15bn euros. Loans wil be for up to five years, but can be converted into shares (i.e. part nationalisation) if the banks fail to pay them back.
1.39pm: And more from Giles:1.39pm: And more from Giles:
De Guindos has said that two separate valuations of the global real estate loan portfolio of Spanish banks will be produced by independent valuers.De Guindos has said that two separate valuations of the global real estate loan portfolio of Spanish banks will be produced by independent valuers.
Journalists at the press conference want to know if this is a vote of no confidence in the Bank of Spain and its valuations. Ministers do not want to answer the question and are insisting that all they want is maximum transparency.Journalists at the press conference want to know if this is a vote of no confidence in the Bank of Spain and its valuations. Ministers do not want to answer the question and are insisting that all they want is maximum transparency.
1.35pm:More from the Spain presser. Giles Tremlett writes:1.35pm:More from the Spain presser. Giles Tremlett writes:
Finance minister Luis de Guindos is explaining Spain's second round of banking reform in three months, following this week's decision to nationalise the fourth larget bank, Bankia.Finance minister Luis de Guindos is explaining Spain's second round of banking reform in three months, following this week's decision to nationalise the fourth larget bank, Bankia.
The government wants banks to make a further €30bn or more in provisions against potential losses in loans to real estate developments. This comes on top of €54bn of provisions from the last reform in February. This brings overall coverage to some 45 percent of all real estate loans (it is not clear whether this includes mortgage loans).The government wants banks to make a further €30bn or more in provisions against potential losses in loans to real estate developments. This comes on top of €54bn of provisions from the last reform in February. This brings overall coverage to some 45 percent of all real estate loans (it is not clear whether this includes mortgage loans).
This will presumably force some banks into losses, bringing further mergers and consolidation. The government's FROB restructuring fund will offer loans at almost 10% interest rates to those who need them.This will presumably force some banks into losses, bringing further mergers and consolidation. The government's FROB restructuring fund will offer loans at almost 10% interest rates to those who need them.
1.26pm: Seems a combination of factors is driving the markets down today with worries about Greece, Spain and the state of banks all at play.1.26pm: Seems a combination of factors is driving the markets down today with worries about Greece, Spain and the state of banks all at play.
Anyway, this is quite a pithy take from BNP Paribas strategist Patrick Jacq, courtesy of Reuters:Anyway, this is quite a pithy take from BNP Paribas strategist Patrick Jacq, courtesy of Reuters:
"The situation is critical and could be terrible if there's no such majority in coming weeks because with no more financial bailout Greece will default and its banks will collapse and ultimately it could mean Greece would have to leave the euro zone."The situation is critical and could be terrible if there's no such majority in coming weeks because with no more financial bailout Greece will default and its banks will collapse and ultimately it could mean Greece would have to leave the euro zone.
"This is what's driving the market at the moment...The environment remains very favourable for safe havens such as the German Bund, U.S. T-note and gilts and for wider peripheral euro zone spreads.""This is what's driving the market at the moment...The environment remains very favourable for safe havens such as the German Bund, U.S. T-note and gilts and for wider peripheral euro zone spreads."
1.17pm: Back to the markets for a quick lunchtime roundup. The main bourses are down ahead of New York opening at 2.30 BST although losses have eased a bit since earlier. Here are the scores on the doors:1.17pm: Back to the markets for a quick lunchtime roundup. The main bourses are down ahead of New York opening at 2.30 BST although losses have eased a bit since earlier. Here are the scores on the doors:
FTSE100 - down 21 points or -0.38% at 5522.
Dax - down 18 points or -0.29% at 6499.
cac - down 35 points or -1.13% at 3094
Ibex - down 90 points or -1.31% at 6951. 		FTSE100 - down 21 points or -0.38% at 5522.
Dax - down 18 points or -0.29% at 6499.
cac - down 35 points or -1.13% at 3094
Ibex - down 90 points or -1.31% at 6951.
1.07pm: The post-cabinet press conference has started in Madrid, with banking reform top of the agenda.1.07pm: The post-cabinet press conference has started in Madrid, with banking reform top of the agenda.
Our correspondent Giles Tremlett writes:Our correspondent Giles Tremlett writes:
Deputy prime minister Soraya Sáenz de Santamaría says the finance ministry will ask independent analysts to come up with a valuation of Spanish bank real estate portfolios (presumably including loans). Finance minister Luis de Guindos will give more details in a minute.Deputy prime minister Soraya Sáenz de Santamaría says the finance ministry will ask independent analysts to come up with a valuation of Spanish bank real estate portfolios (presumably including loans). Finance minister Luis de Guindos will give more details in a minute.
But this seems to be an attempt to identify the exact exposure of banks to toxic real estate assets left over from the housing bust.But this seems to be an attempt to identify the exact exposure of banks to toxic real estate assets left over from the housing bust.
She also says that today's banking reforms - expected to include demands for greater provisions against real estate losses - will not include public money.She also says that today's banking reforms - expected to include demands for greater provisions against real estate losses - will not include public money.
12.54pm: Spanish press conference starting right now.12.54pm: Spanish press conference starting right now.
12.51pm: Our financial commentator Nils Pratley has written an excellent piece on the JP Morgan fiasco here.12.51pm: Our financial commentator Nils Pratley has written an excellent piece on the JP Morgan fiasco here.
Just a flavour:Just a flavour:
When outsiders know more about what's going on inside a big bank than the bank's own management, none of Dimon's adjectives does justice to the character of the cock-up. He even ended up saying he wished he'd paid more attention to the newspapers.When outsiders know more about what's going on inside a big bank than the bank's own management, none of Dimon's adjectives does justice to the character of the cock-up. He even ended up saying he wished he'd paid more attention to the newspapers.
12.44pm: On JP Morgan, our reporter Simon Neville has been doing some digging and has some more details on the trader behind the disastrous losses.12.44pm: On JP Morgan, our reporter Simon Neville has been doing some digging and has some more details on the trader behind the disastrous losses.
Trades, in particular, by Paris-born London-based trader Bruno Michel Iksil were to blame.Trades, in particular, by Paris-born London-based trader Bruno Michel Iksil were to blame.
The mysterious banker, who has been nicknamed the London Whale and Lord Voldemort, has been registered with the Financial Services Authority since 2007.The mysterious banker, who has been nicknamed the London Whale and Lord Voldemort, has been registered with the Financial Services Authority since 2007.
He commutes weekly from his Paris home and is still employed by JP Morgan, working from its London offices.He commutes weekly from his Paris home and is still employed by JP Morgan, working from its London offices.
Iksil offered insurance against companies defaulting, Credit Default Swaps, on an obscure index of 125 companies known as CDX IG 9.Iksil offered insurance against companies defaulting, Credit Default Swaps, on an obscure index of 125 companies known as CDX IG 9.
He earned his nickname through his bullish position, which triggered moves in the market, upsetting hedge funds who piled in against him.He earned his nickname through his bullish position, which triggered moves in the market, upsetting hedge funds who piled in against him.
The companies on the IG 9 index were as varied as Campbell's Soup, Time Warner and Walt Disney.The companies on the IG 9 index were as varied as Campbell's Soup, Time Warner and Walt Disney.
During his time at JP Morgan Iksil is reported to have generated $100m, and is usually known for his bearish stances, performing particularly well during downturns.During his time at JP Morgan Iksil is reported to have generated $100m, and is usually known for his bearish stances, performing particularly well during downturns.
12.34pm: Back to the banking situation.12.34pm: Back to the banking situation.
1. The post-cabinet press conference is about to start in Spain so we should find out soon about the planned reforms.1. The post-cabinet press conference is about to start in Spain so we should find out soon about the planned reforms.
2. Bank shares are set to get hammered this afternoon on the back of the JP Morgan fiasco and bad Credit Agricole figures.2. Bank shares are set to get hammered this afternoon on the back of the JP Morgan fiasco and bad Credit Agricole figures.
JPM is down 7% on futures trading with Goldman, Morgan Stanley etc at around 3% down as investors digest the implications of JPM's $2bn howler. Fantastic scoop for the Wall Street Journal as well, I should add.JPM is down 7% on futures trading with Goldman, Morgan Stanley etc at around 3% down as investors digest the implications of JPM's $2bn howler. Fantastic scoop for the Wall Street Journal as well, I should add.
12.18pm: More from Greece. Democratic left leader Fotis Kouvelis has spelled out why he can't join a government with the two pro-bailout parties Pasok and New Democracy.12.18pm: More from Greece. Democratic left leader Fotis Kouvelis has spelled out why he can't join a government with the two pro-bailout parties Pasok and New Democracy.
He says any coalition must include election runner-up Alexis Tsipras, whose anti-bailout Radical Left Coalition, or Syriza, won 16.78% of the vote and 52 seats in the 300-member parliament. Tsipras has so far refused to join any pro-bailout so unless he has a change of heart it looks like back to the elections.He says any coalition must include election runner-up Alexis Tsipras, whose anti-bailout Radical Left Coalition, or Syriza, won 16.78% of the vote and 52 seats in the 300-member parliament. Tsipras has so far refused to join any pro-bailout so unless he has a change of heart it looks like back to the elections.
"It is clear from its reaction that from the first moment, Syriza wanted elections," Kouvelis told his deputies in a speech Friday. "And without Syriza, a government cannot be formed that is in harmony with the popular will, representing the strength of each political party."It is clear from its reaction that from the first moment, Syriza wanted elections," Kouvelis told his deputies in a speech Friday. "And without Syriza, a government cannot be formed that is in harmony with the popular will, representing the strength of each political party.
"We have made our position clear. In a government with (only) New Democracy and Pasok, we will not take part.""We have made our position clear. In a government with (only) New Democracy and Pasok, we will not take part."
12.09pm:The Democratic left party in Greece has said it will not back a pro-bailout government. 12.09pm:The Democratic left party in Greece has said it will not back a pro-bailout government.
That almost certainly means that Venizelos's attempts to form a government coalition around agreement on the bailout terms are dashed and that the country will face fresh elections.That almost certainly means that Venizelos's attempts to form a government coalition around agreement on the bailout terms are dashed and that the country will face fresh elections.
11.51am: We're zipping about a bit here but some very interesting comments from Francois Hollande this morning. He says that outgoing president Nicolas Sarkozy underplayed how bad the French fiscal situation had become and that today's EC forecasts confirm his suspicions.11.51am: We're zipping about a bit here but some very interesting comments from Francois Hollande this morning. He says that outgoing president Nicolas Sarkozy underplayed how bad the French fiscal situation had become and that today's EC forecasts confirm his suspicions.
However, he says it won't mean that he will try to water down his campaign pledge to balance the books while finding growth.However, he says it won't mean that he will try to water down his campaign pledge to balance the books while finding growth.
"No, we had already expected this," Hollande said on TV."No, we had already expected this," Hollande said on TV.
11.33am: Over to Madrid, where our correspondent Giles Tremlett says that there will be news about Spain's bank reforms after 2pm. Read about it here live.11.33am: Over to Madrid, where our correspondent Giles Tremlett says that there will be news about Spain's bank reforms after 2pm. Read about it here live.
11.21am: Ian Traynor, our man in Brussels, notes that the EC's spring forecasts are a good test of whether or not Europe's austerity drive is working. He's been in the presser with Olli Rehn this morning and has sent these observations:11.21am: Ian Traynor, our man in Brussels, notes that the EC's spring forecasts are a good test of whether or not Europe's austerity drive is working. He's been in the presser with Olli Rehn this morning and has sent these observations:
To judge by national debt levels (rising) and the reasons adduced for this, it would appear not.To judge by national debt levels (rising) and the reasons adduced for this, it would appear not.
The EC says: "Government debt to GDP ratios are forecast to increase in most member states. In the euro area, increasing interest payments and low growth are contributing to push up debt ratios."The EC says: "Government debt to GDP ratios are forecast to increase in most member states. In the euro area, increasing interest payments and low growth are contributing to push up debt ratios."
That sounds like a downward spiral. Overall debt ratio in EU likely to rise to 87% next year from 86% this year. It's worse in the eurozone, increasing from 92% to 93%.That sounds like a downward spiral. Overall debt ratio in EU likely to rise to 87% next year from 86% this year. It's worse in the eurozone, increasing from 92% to 93%.
So, is austerity working, reporters asked Rehn:So, is austerity working, reporters asked Rehn:
"That's too simple, simplistic," comes the reply, before replaying his riff on investment, "project bonds", the European Investment Bank etc"That's too simple, simplistic," comes the reply, before replaying his riff on investment, "project bonds", the European Investment Bank etc
10.51am: Unlike Spain, Italy seems to have escaped censure from headmaster Rehn. He sees growth there at -1.4 this year but back into the black next year at 0.4%. There's also an improved deficit picture falling from -2% this to -1.1 next - well within the EU targets.10.51am: Unlike Spain, Italy seems to have escaped censure from headmaster Rehn. He sees growth there at -1.4 this year but back into the black next year at 0.4%. There's also an improved deficit picture falling from -2% this to -1.1 next - well within the EU targets.
And in more good news, there was decent demand for short-term Italian debt this morning which helped to push Italian 10-year yields down slightly ahead of bigger sales next week.And in more good news, there was decent demand for short-term Italian debt this morning which helped to push Italian 10-year yields down slightly ahead of bigger sales next week.
Italy sold €7bn of 12-month Treasury bills at an average 2.34%, down from 2.84% in mid-April, Reuters reports. The sale was covered 1.79 times versus a bid-to-cover ratio of 1.52 in April.Italy sold €7bn of 12-month Treasury bills at an average 2.34%, down from 2.84% in mid-April, Reuters reports. The sale was covered 1.79 times versus a bid-to-cover ratio of 1.52 in April.
10.43am: The EC figures are a bit more optimistic on unemployment but still bad as far as Spain goes. It says the jobless total there will climb to 25.1% next year from 24.4% this year - by far the highest rate in the EU. Greece is the next worst at 19.7% this year, falling to 19.6% next, so ever so slightly better news for Athens.10.43am: The EC figures are a bit more optimistic on unemployment but still bad as far as Spain goes. It says the jobless total there will climb to 25.1% next year from 24.4% this year - by far the highest rate in the EU. Greece is the next worst at 19.7% this year, falling to 19.6% next, so ever so slightly better news for Athens.
At a news conference in Brussels, Rehn has been adding to the earlier statement about Spain. He says:At a news conference in Brussels, Rehn has been adding to the earlier statement about Spain. He says:
The commission has full confidence in the determination of the Spanish government to meet the fiscal target in line with the pact. For Spain, the key to restoring confidence and growth is to tackle the immediate fiscal and financial challenges with full determination.The commission has full confidence in the determination of the Spanish government to meet the fiscal target in line with the pact. For Spain, the key to restoring confidence and growth is to tackle the immediate fiscal and financial challenges with full determination.
This calls for a very firm grip to curb the excessive spending of regional governments.This calls for a very firm grip to curb the excessive spending of regional governments.
Rehn added that by the end of this month the EC would be able to assess what extra measures Madrid would need to take to meet its deficit targets.Rehn added that by the end of this month the EC would be able to assess what extra measures Madrid would need to take to meet its deficit targets.
10.33am: More on the figures from Brussels. The overall EU-wide budget deficit is seen coming in at 3.5% this year, down from 4.5%. Next year they say it will be 3.25%.10.33am: More on the figures from Brussels. The overall EU-wide budget deficit is seen coming in at 3.5% this year, down from 4.5%. Next year they say it will be 3.25%.
Olli Rehn, the monetary affairs commissioner, also reckons that the UK economy will grow at 1.7% next year - the same as Germany.Olli Rehn, the monetary affairs commissioner, also reckons that the UK economy will grow at 1.7% next year - the same as Germany.
10.17am: Back again. Sorry for delay. Slight technical hitch. The EC forecasts make grim reading, especially for Spain.10.17am: Back again. Sorry for delay. Slight technical hitch. The EC forecasts make grim reading, especially for Spain.
The EC says Spain will remain in recession this year and next unless it changes policies. Spain says it can reduce its budget deficit to 5.3% this year but that looks very difficult now with the EC forecasting it to come in at 6.4%.The EC says Spain will remain in recession this year and next unless it changes policies. Spain says it can reduce its budget deficit to 5.3% this year but that looks very difficult now with the EC forecasting it to come in at 6.4%.
The EC says:The EC says:
Whereas the (5.3 percent) target of the central government should be within reach, deviations are projected at this stage for regional governments. This reflects the standard no-policy-change assumption and the fact that not all consolidation measures at regional level for 2012 have been specified yet.Whereas the (5.3 percent) target of the central government should be within reach, deviations are projected at this stage for regional governments. This reflects the standard no-policy-change assumption and the fact that not all consolidation measures at regional level for 2012 have been specified yet.
It has also revised down its forecast for growth in Spain from -1% in February to minus 1.8%. Tough to see where deficit-reducing growth is coming from there.
Also, the Commission forecast it would still contract by a further 0.3 percent next year.		It has also revised down its forecast for growth in Spain from -1% in February to minus 1.8%. Tough to see where deficit-reducing growth is coming from there.
Also, the Commission forecast it would still contract by a further 0.3 percent next year.
10.01am: The EC forecasts are out and they're none too pretty.10.01am: The EC forecasts are out and they're none too pretty.
It predicts that Spain's budget deficit will balloon to 6.4% of GDP this year compared with a previous forecast of 5.9%.It predicts that Spain's budget deficit will balloon to 6.4% of GDP this year compared with a previous forecast of 5.9%.
Here are some other highlights:
Portuguese deficit will be 4.7% (was 4.5%)
Greece 7.3% (7%)
Italy 2% (2.3%)
France 4.5% (5.3%)
Germany 0.9% (1%)		Here are some other highlights:
Portuguese deficit will be 4.7% (was 4.5%)
Greece 7.3% (7%)
Italy 2% (2.3%)
France 4.5% (5.3%)
Germany 0.9% (1%)
More shortly.More shortly.
9.40am: UK factory gate inflation did not fall as much as expected last month. The ONS says that producer prices rose 3.3% last month compared with 3.7% in March. This was the lowest since December 2009 but well above the forecast of 2.9% and will highlight the continued risk of consumer inflation rising.9.40am: UK factory gate inflation did not fall as much as expected last month. The ONS says that producer prices rose 3.3% last month compared with 3.7% in March. This was the lowest since December 2009 but well above the forecast of 2.9% and will highlight the continued risk of consumer inflation rising.
9.31am: The EC forecasts aren't out yet but, in a little blog exclusive, we understand that Rehn will forecast the French deficit to be 4% next year. That's bad news for Hollande who expects to meet the fiscal target of 3% while spurring growth.9.31am: The EC forecasts aren't out yet but, in a little blog exclusive, we understand that Rehn will forecast the French deficit to be 4% next year. That's bad news for Hollande who expects to meet the fiscal target of 3% while spurring growth.
9.07am: Things would be greatly helped if the Greeks could sort themselves out of course. To that end socialist leader Evangelos Venizelos is meeting his conservative counterpart Antonio Samaras today to see if they can put together a government of national unity.9.07am: Things would be greatly helped if the Greeks could sort themselves out of course. To that end socialist leader Evangelos Venizelos is meeting his conservative counterpart Antonio Samaras today to see if they can put together a government of national unity.
The talks between the two leaders, whose usually dominant parties were hammered in Sunday's election, represents the last chance for Greece to get a government without fresh elections.The talks between the two leaders, whose usually dominant parties were hammered in Sunday's election, represents the last chance for Greece to get a government without fresh elections.
We'll get more on this as it happens.We'll get more on this as it happens.
8.54am: As promised, we've now got some words on the slowdown in China here.8.54am: As promised, we've now got some words on the slowdown in China here.
Although China grew by 8.1% in the first quarter, that's not great by its recent standards and was down from 8.9% in the fourth quarter of 2011. Many experts are therefore talking about the need for new stimulus measures there to keep the growth up above 8%.Although China grew by 8.1% in the first quarter, that's not great by its recent standards and was down from 8.9% in the fourth quarter of 2011. Many experts are therefore talking about the need for new stimulus measures there to keep the growth up above 8%.
Here's Lorraine Tan, director of equities research at credit ratings agency Standard & Poor's:Here's Lorraine Tan, director of equities research at credit ratings agency Standard & Poor's:
Now that you have the European uncertainty coming back in a bigger way, I think people are going to hold back a bit longer. The key will be for China to grow at least 8 percent this year to help fuel global growth and demand.Now that you have the European uncertainty coming back in a bigger way, I think people are going to hold back a bit longer. The key will be for China to grow at least 8 percent this year to help fuel global growth and demand.
8.48am: Also expected today are the European Commission's economic forecasts which our Europe editor, Ian Traynor, pictured, points out could be quite tricky for newly elected french president Francois Hollande. Here's Ian:8.48am: Also expected today are the European Commission's economic forecasts which our Europe editor, Ian Traynor, pictured, points out could be quite tricky for newly elected french president Francois Hollande. Here's Ian:
After a week of ferocious political austerity-v-growth argument across Europe, triggered by Francois Hollande's triumph last weekend and the electoral fallout in Greece, sobering statistics are expected from the European Commission this morning when Olli Rehn presents his spring forecasts on deficits, debt, and unemployment levels in the European economy.After a week of ferocious political austerity-v-growth argument across Europe, triggered by Francois Hollande's triumph last weekend and the electoral fallout in Greece, sobering statistics are expected from the European Commission this morning when Olli Rehn presents his spring forecasts on deficits, debt, and unemployment levels in the European economy.
Apart from the usual suspects - the Greek calamity and the worsening
situation in Spain - many eyes will be on the figures for France and
what they indicate about Hollande's ambitions.		Apart from the usual suspects - the Greek calamity and the worsening
situation in Spain - many eyes will be on the figures for France and
what they indicate about Hollande's ambitions.
The new regime in Paris has said it is committed to meeting the budget deficit target of 3% next year while relaxing austerity and trying to spur growth. The expectation in Brussels is that Rehn's figures will emphasise the daunting challenges faced by Hollande. The policy prescription is bound to be one of belt-tightening rather than stepping off the brakes.The new regime in Paris has said it is committed to meeting the budget deficit target of 3% next year while relaxing austerity and trying to spur growth. The expectation in Brussels is that Rehn's figures will emphasise the daunting challenges faced by Hollande. The policy prescription is bound to be one of belt-tightening rather than stepping off the brakes.
The Dutch, also in a deficit mess despite their preaching of fiscal orthodoxy, will also be taken to task. Speculation is rife, however, that Mariano Rajoy in Spain might be given a bit more time to meet the eurozone targets.The Dutch, also in a deficit mess despite their preaching of fiscal orthodoxy, will also be taken to task. Speculation is rife, however, that Mariano Rajoy in Spain might be given a bit more time to meet the eurozone targets.
8.39am: It's suddenly looking quite lively today. The unexpected news from JP Morgan last night has clearly upset market sentiment but a 75% fall in profits at Credit Agricole in France - blamed on losses in Greece - has added to renewed unease about the banking sector.8.39am: It's suddenly looking quite lively today. The unexpected news from JP Morgan last night has clearly upset market sentiment but a 75% fall in profits at Credit Agricole in France - blamed on losses in Greece - has added to renewed unease about the banking sector.
Given that we're also expecting a big announcement from Spain today about what they plan to do about their banks and the market reaction seems a bit easier to fathom.Given that we're also expecting a big announcement from Spain today about what they plan to do about their banks and the market reaction seems a bit easier to fathom.
8.27am: Markets all over Europe are down as well, following overnight falls in Asia. The Ibex in Madrid, which hit a 9-year low this week, is down 1.25%. The CAC in Paris is off 1% while the Dax in Frankfurt is down 0.6%.8.27am: Markets all over Europe are down as well, following overnight falls in Asia. The Ibex in Madrid, which hit a 9-year low this week, is down 1.25%. The CAC in Paris is off 1% while the Dax in Frankfurt is down 0.6%.
8.21am: The FTSE100 in London is down nearly 26 points, not helped by the overnight revelations that a trader here known as the London Whale has cost JP Morgan $2bn.8.21am: The FTSE100 in London is down nearly 26 points, not helped by the overnight revelations that a trader here known as the London Whale has cost JP Morgan $2bn.
Banks taking a bit of a pasting - Barclays down 2.3%, ditto RBS, which has also announced 500 job cuts in Holland. That's around 25% of its headcount in Amsterdam where it has operations as a result of its ill-fated takeover of ABN Amro. That, truly, is the deal that keeps on giving.Banks taking a bit of a pasting - Barclays down 2.3%, ditto RBS, which has also announced 500 job cuts in Holland. That's around 25% of its headcount in Amsterdam where it has operations as a result of its ill-fated takeover of ABN Amro. That, truly, is the deal that keeps on giving.
8.11am: Good morning and welcome to the live blog. The action today promises to be mainly in Spain where the cabinet is meeting to discuss banking reforms and how much taxpayer money might be needed to support the country's creaking banking system. See here for an excellent summary of how things have gone wrong there.8.11am: Good morning and welcome to the live blog. The action today promises to be mainly in Spain where the cabinet is meeting to discuss banking reforms and how much taxpayer money might be needed to support the country's creaking banking system. See here for an excellent summary of how things have gone wrong there.
Otherwise the markets are set to open sharply down after figures from China showed that its economy is still slowing down. Story coming on that soon. Could be a big day for "hard landing/soft landing" debates.Otherwise the markets are set to open sharply down after figures from China showed that its economy is still slowing down. Story coming on that soon. Could be a big day for "hard landing/soft landing" debates.
We've also got UK producer prices at 9.30am to look forward to.We've also got UK producer prices at 9.30am to look forward to.