Sorry to quibble, but there was no EU banking union deal last night. It was a step backwards from agreements already made in June.
Germany has succeeded in kicking the issue into touch until after the Bundestag elections late next year. There will be no decision until deep into 2013 on whether to recapitalise the banks (ie crippled Spanish banks) directly through the European Stability Mechanism.
The crucial issue of whether this can be applied "retroactively" to legacy assets remaining from the Spanish burbuja will be discussed later by finance ministers. ie, by the same AAA bloc that has already said it won't underwrite this mess.
The final text repeats verbatim the loose commitment from the June summit to break the vicious circle between banks and sovereign states, but Europe is not in fact any closer to doing so. The timetable has slipped further.
As our Brussels correspondent Bruno Waterfield reports, the EU has wasted the window of opportunity offered by the ECB's Draghi Plan to restore market trust.
Sovereign debt strategist Nicholas Spiro says Europe's leaders have mistaken the bond calm of recent weeks for a vote of confidence in their crisis strategy. Woe betide Spain.
The country is left dangling in the wind. It has to be assumed that the costs of the Spanish bank bail-out – €60bn package from the ESM – will fall on the shoulders of the state. The sum could ultimately be nearer €100bn if the bears are right about the true condition of the Spanish banking system and housing market (which has been prevented from clearing so far).
Read more: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100020875/europe-mistakes-market-lull-for-vote-of-confidence/
Germany has succeeded in kicking the issue into touch until after the Bundestag elections late next year. There will be no decision until deep into 2013 on whether to recapitalise the banks (ie crippled Spanish banks) directly through the European Stability Mechanism.
The crucial issue of whether this can be applied "retroactively" to legacy assets remaining from the Spanish burbuja will be discussed later by finance ministers. ie, by the same AAA bloc that has already said it won't underwrite this mess.
The final text repeats verbatim the loose commitment from the June summit to break the vicious circle between banks and sovereign states, but Europe is not in fact any closer to doing so. The timetable has slipped further.
As our Brussels correspondent Bruno Waterfield reports, the EU has wasted the window of opportunity offered by the ECB's Draghi Plan to restore market trust.
Sovereign debt strategist Nicholas Spiro says Europe's leaders have mistaken the bond calm of recent weeks for a vote of confidence in their crisis strategy. Woe betide Spain.
The country is left dangling in the wind. It has to be assumed that the costs of the Spanish bank bail-out – €60bn package from the ESM – will fall on the shoulders of the state. The sum could ultimately be nearer €100bn if the bears are right about the true condition of the Spanish banking system and housing market (which has been prevented from clearing so far).
Read more: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100020875/europe-mistakes-market-lull-for-vote-of-confidence/
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