Canada Goose Jackets Who’d want to be a G
By Keith Mullin, Editor at Large, International Financing Review. The views expressed are his own.
buy canada goose jacket cheap LONDON, June 24 (Reuters) Who want to be a G SIFI? Well, everyone canada goose clearance sale actually. In creating this ugly acronym, code for banks uk canada goose outlet that are too big to fail, might regulators unwittingly be pushing cusp institutions towards greater risk taking in order to qualify?
canadian goose jacket As the Financial Stability Board attempts to find some common ground cheap Canada Goose between warring factions in the G20 about how much supplementary capital Globally Systemically Important Financial Canada Goose sale Institutions will have to hold note to FSB, Canada Goose online there is no common ground banks are vying to be seen to be too big to fail because the effective state guarantee will cheapen their wholesale funding lines.
cheap Canada Goose Weighing up the additional burden canada goose coats on sale of higher capital charges and marginally lower return on equity against the benefits of cheaper debt will likely result in a positive sum game over a relatively short time period, as analysts are comfortable that the surcharge won actually create much of a capital deficit, if at all. common equity versus hybrid forms), the consensus surcharge is coming out at around three percentage points over the 7 percent Basel III 2013 core capital levels, with a long lead time to ensure that any additional capital raising can be conducted over time and be absorbed by the market.
Canada Goose Parka There not a lot of consensus on that number, though. The UK would like total core capital of 15 percent all in common equity. The Swiss canadian goose jacket have already laid down their marker at 10 percent core plus 9 percent contingent forms, while the Fed is playing it a buy canada goose jacket bit loose with 3 percent over Basel (but all in common equity).
canada goose coats on sale Ahead of first drafts of the rules, investors Canada Goose Parka in bank stocks are playing a cautious game, putting higher than expected surcharge forecasts into their pricing models for certain institutions, which has had the canada goose store effect of depressing bank stock canada goose prices.
canada goose deals This is a buy signal.
Canada Goose online As more concrete information starts to become available from mid July and assuming the SIFI surcharge comes out around 3 percent, we likely to see a uk canada goose pop in stocks that are being overly penalised.
buy canada goose jacket The 3 percent supplementary charge, an effective proxy for the cost of a state guarantee, is not a bad trade. But one G SIFI measure is the degree of inter connectedness a bank has vis a vis the rest of financial system.
canada goose black friday sale This might just be an incentive for a bank that thinks it may be on the cusp of G SIFIness to get out there and ramp things up a bit to make sure.
Myron Scholes, Nobel prize canada goose uk outlet winner cheap canada goose uk but perhaps better known today as the man whose models helped blow up Long Term Capital Management and send the global market canada goose black friday sale into a tailspin, thinks subjecting major banks to higher capital requirements could cause more volatility in financial markets. Writing in Risk, he reckons that higher capital needs will canada goose factory sale force canada goose uk black friday banks to wait for larger price deviations before they intermediate in order to generate acceptable returns on that higher capital. intermediary services stop, markets then become more chaotic, he wrote.
canada goose coats Of course, beyond actual levels of capital, a potentially more convoluted issue is liquidity. Canada Goose Coats On Sale As banks start to focus on required liquidity coverage and net stable funding ratios, it becoming apparent canada goose coats that this has more latitude Canada Goose Jackets to disrupt the availability and cost of senior buy canada goose jacket cheap bank funding. Watch this space.
Canada Goose Outlet NO DEFAULT TESTING I know I been banging on a bit about bank stress tests, but the comedy keeps on getting darker. In Europe dumb politics (or do I mean politicians?) have properly ensured that political outcomes have triumphed over proper testing of financial stress using realistic base case scenarios, to the extent that the whole process has become unfit for purpose. EU tests will exclude assumption of default of a euro zone country because default or debt restructuring of a euro zone country is not a canada goose uk shop politically acceptable option.
canada goose At best, this is pure sophistry; at worst it is reckless endangerment. The whole point of bank stress test is to enhance investor sentiment. Whether restructuring or default is on or off the table as an acceptable option for politicians is irrelevant against the realities of bank balance sheets, exposure to weak sovereigns, and potential mark to market https://www.cheapcanadagoose.net losses. And it ignores and the not insignificant issues of whether debtors like Greece actually have any money to maintain debt service over the medium term.
canada goose clearance At the end of the day, cheap canada goose online stress tests are an exercise. If you testing for the impact of some sort of long lived macroeconomic malfunction, why Canada Goose Outlet not throw a Greek default in there as well? But no. Olli Rehn, the EU Commissioner for Economic and Financial Affairs, said that because capital adequacy had been tightened, excluding default assumptions from the official tests was a deliberate choice. do not believe Canada Goose Online restructuring is good for Greece or other countries. We have decided. that we are engaged in a Vienna style initiative on a voluntary basis, which will avoid a credit default, which does not mean debt restructuring and we do not envisage default as a scenario, he said.
canada goose clearance sale Back on Planet Earth, national regulators have asked their banks to quantify potential losses from holdings of Greek debt and debt of other shaky sovereigns on trading and banking books because canada goose clearance they want to know what the risks are. But they doing so without having to acknowledge default as a possibility. Incredible.
Canada Goose sale I not fluent in EU techno babble, but if officials are so convinced that default can happen, I can only imagine that means they stand behind Greece and other bankrupt sovereigns in their darkest hour. In that case, in a fit of potentially counter intuitive folly, I an aggressive seller of synthetic Greece protection no matter that Greek CDS levels imply an 82 percent probability of default and I using the positive carry to hoover up cash bonds at the front of the curve, targeting the two year. And if my trade blows up, I sending the bill to Olli.
