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Creeping Mistrust Stops Euro Zone Banks Lending To Peers Across Bloc

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http://uk.reuters.com/article/2013/06/21/uk-eurozone-banks-analysis-idUKBRE95K08F20130621

Euro zone banks are refusing to lend to peers in other countries in the common currency bloc, signalling a worrying fall in confidence that appears to have worsened since the Cyprus bailout earlier this year, data analysed by Reuters showed.

In a trend that could reignite fears about the euro and its banks, European Central Bank data shows the share of interbank funding that crosses borders within the euro zone dropped by a third, to just 22.5 percent in April from 34.5 percent at the beginning of 2008.

Banks are now lending to other banks across euro zone borders at only about the same rate as when the single currency was first launched, 15 years ago.

The silent retreat to within national borders is most pronounced in the troubled economies of southern Europe but is seen even in Germany.

Cross-border interbank funding of German banks was down by 11.2 percent year on year in March, equivalent to banks elsewhere in Europe withdrawing 29.5 billion euros from its biggest economy.

"We have seen the banks very much reverting to their domestic markets and not wanting to extend credit abroad," said Tony Stringer, a government debt analyst with ratings agency Fitch.

"Interbank deposits have been reduced. Confidence in banks across the euro zone has been reduced. If banks continue to struggle, then they can't extend credit to the real economy."

China Credit Crunch thread

So we have the Chinese having a problem with interbank credit drying up and now we have a growing issue in Europe with banks not trusting us. Is the water slowly reaching boiling point again and we are going to see another massive global liquidity problem?

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The cross-border freeze also blunts ECB efforts to bolster the economy by cutting interest rates because it prevents cheaper and easier loans for consumers and business, especially in southern Europe, where loan costs are double that of north.

Were the system working at its best, southern European banks should be able to borrow from northern ones and pass on the cheap rates to their customers.

what a load of crap!

The reason that credit is more expensive in Ireland and southern Europe is that the risk is higher.

For example, take Ireland where it is impossible for the banks to repossess houses that have a secured mortgage. what interest rate should they be charged? More or less than Germany.

enough said.

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what a load of crap!

The reason that credit is more expensive in Ireland and southern Europe is that the risk is higher.

For example, take Ireland where it is impossible for the banks to repossess houses that have a secured mortgage. what interest rate should they be charged? More or less than Germany.

enough said.

why is it impossible to recover the security given on a defaulting mortgage in Ireland?

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http://www.irishtimes.com/business/economy/ireland/troika-wants-government-to-reform-repossession-laws-1.753960

Troika wants Government to reform repossession laws

The EU-IMF Troika wants the Government to remove a legal impediment constraining banks from repossessing properties tied to bad loans.

In the latest revision of Ireland’s bailout terms, published today, the Troika says the Irish authorities must introduce legislation remedying a flaw in legislation governing property repossessions.

Last year, Ms Justice Elizabeth Dunne found a failure to save aspects of old legislation when the Land and Conveyancing Law Reform Act 2009 was introduced meant the only registered properties that lenders could repossess for failure to pay mortgages were those for which they had demanded full repayment before December 1st, 2009.

According to the Central Bank’s latest figures, there were 167,000 mortgage accounts with €35 billion of debt in arrears at the end of June 2012.

At the same time, some 265 orders for possession were granted by the courts in the first six months of the year, down by almost 32 per cent on the same time last year, when 390 orders were granted.

The Central Bank's head of banking supervision Fiona Muldoon recently criticised the banks for their slow progress in tackling mortgage arrears cases. saying the scale of the problem showed that "wait and see" had become the strategy of choice for lenders.

The latest update to the Troika’s memorandum of understanding with the Government states the authorities must move to remedy the flawed repossession legislation once adequate protections for debtors and their principal private residence were enacted via the proposed personal insolvency legislation.

The document also obliges the Irish authorities to publish banks’ reported data on loan modifications, including defaults of modified loans, “to permit analysis of the effectiveness of alternative resolution approaches”.

The bailout programme review also called on the authorities to halt overruns in health spending and to keep overall health expenditure below €13.6 billion next year.

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I am not sure how long it will be before the next bailout, but one will be coming. Combining this with the new bail in plans, looks like it could be worth shifting money around/out of Ireland whilst the going is good.

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Latest Irish arrears and repossession data just out:

http://www.centralbank.ie/press-area/press-releases/Pages/MortgageArrearsandRepossessionsStatisticsQ12013.aspx

The Central Bank today (21 June 2013) publishes the latest data on mortgage arrears, repossessions and restructures for the period ending March 2013. The main points are as follows:

There were 95,554 (12.3 per cent) private residential mortgage accounts for principal dwelling houses (PDH) in arrears of over 90 days at end-March 2013, up from 92,349 accounts (11.9 per cent) at end-December 2012.

Legal Proceedings and Repossessions

During the first quarter of 2013, legal proceedings were issued to enforce the debt/security on a PDH mortgage in 255 cases. Court proceedings concluded in 222 cases during the quarter, and in 105 of these cases the Courts granted an order for repossession or sale of the property.

As can be clearly seen above there is a huge hidden problem with the banks balance sheets, not just in Ireland but also Spain, Greece, Portugal and Italy.

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The politicians and central bankers will revert to printing - that is their solution for everything now. Oh, and have lots of meetings in expensive locations.

Problem with that is, they don`t need to revert because they are already printing, and it isn`t working?

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Those mortgage arrears figures from Ireland looked even worse if you see some of the breakdown of them.

However a contrasting impression has been given by today’s figures from the Central Bank of Ireland on mortgage arrears. Of a total mortgage book of some 110 billion Euros it reports that 25.4 billion Euros worth were in arrears as of the end of March. Of this a chilling 5.35 billion Euros worth of mortgages are more than two years in arrears. No wonder there is little sign of an expansion in bank lending in Ireland with a particular credit squeeze on smaller businesses being reported.

http://www.mindfulmoney.co.uk/wp/shaun-richards/is-ireland-on-a-path-to-a-second-bailout/

Who is going to want to lend to an Irish bank? Also as pointed out the banks will be too busy dealing with existing problems to lend more now.

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Problem with that is, they don`t need to revert because they are already printing, and it isn`t working?

The more they print the more interest will demanded for the greater risk.....the high risk that the capital will never be repaid and if it ever is it will be worth peanuts, wouldn't be worth the cost of a peanut. ;)

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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