FT Alphaville

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Via Nomura, which adds:

Last fall, at the height of the tensions surrounding the euro area, large US banks faced some pressure in financial markets. Equity valuations for the large global banks were depressed and credit default swap (CDS) rates were elevated. Inter-bank borrowing rates increased somewhat last fall, but there was more notable pressure longer-term funding markets. Spreads on bank bonds increased roughly 100 basis points last fall. In recent weeks equity prices for US banks have fallen back and CDS rates have moved up somewhat. But pressures in bank funding markets are notably less intense than they were last fall.
One factor that likely helped to reduce investors concerns about US banks was the completion of the latest stress test conducted by US supervisors. In the Federal Reserve’s Comprehensive Credit Analysis and Review (CCAR), large US banks’ evaluated their financial performance under a variety of relatively severe assumptions. These included assumptions that financial stress in Europe would lead to problems with the counter parties for the largest banks. The CCAR exercise suggested that most of the 19 largest US financial institutions have adequate capital under the assumed stresses. In the wake of the CCAR, most of the large banks’ plans to return capital to investors, either through increased dividends or share buybacks, were approved. Taken together, the improvements in banks’ balance sheets and the CCAR results, do not suggest any particular vulnerability of US financial institutions to pressures that could come from Europe.

Call us worrywarts, but we think this (and this) still apply.
(Cardiff)

Via Nomura, which adds:

Last fall, at the height of the tensions surrounding the euro area, large US banks faced some pressure in financial markets. Equity valuations for the large global banks were depressed and credit default swap (CDS) rates were elevated. Inter-bank borrowing rates increased somewhat last fall, but there was more notable pressure longer-term funding markets. Spreads on bank bonds increased roughly 100 basis points last fall. In recent weeks equity prices for US banks have fallen back and CDS rates have moved up somewhat. But pressures in bank funding markets are notably less intense than they were last fall.

One factor that likely helped to reduce investors concerns about US banks was the completion of the latest stress test conducted by US supervisors. In the Federal Reserve’s Comprehensive Credit Analysis and Review (CCAR), large US banks’ evaluated their financial performance under a variety of relatively severe assumptions. These included assumptions that financial stress in Europe would lead to problems with the counter parties for the largest banks. The CCAR exercise suggested that most of the 19 largest US financial institutions have adequate capital under the assumed stresses. In the wake of the CCAR, most of the large banks’ plans to return capital to investors, either through increased dividends or share buybacks, were approved. Taken together, the improvements in banks’ balance sheets and the CCAR results, do not suggest any particular vulnerability of US financial institutions to pressures that could come from Europe.

Call us worrywarts, but we think this (and this) still apply.

(Cardiff)