BRUXELLES - "We affirm that it is imperative to break the vicious circle between banks and sovereigns,” said a summit statement.
Relief for Spain was accompanied by a pledge to begin purchases of Italian bonds using EU bailout funds to reduce Italy’s borrowing costs with a lighter set of conditions, based on meeting Brussels fiscal targets rather than intrusive IMF oversight.
A promise was also made to “examine the situation of the Irish financial sector” offering possible relief to Ireland by relieving the government balance sheet debt burden.
The Spanish bank bailout, to be agreed on 9 July, will initially use the euro’s European Financial Stability Facility (EFSF) before it is transferred into a new permanent fund later this year.
When the transfer takes place to the European Stability Mechanism the new loans will not be given seniority, giving extra security to Spain’s creditors.
After the ECB takes over eurozone banking supervision next year then the Spanish bailout will “very rapidly taken off balance sheet” and directly loaned to banks reducing Spain’s debt burden and borrowing costs....
More reaction to the summit: Ratings agency, Fitch, said
the summit eases near-term pressure on euro sovereign ratings. Here's a taster
of Fitch's statement: Our initial assessment of the summit of EU leaders held
in Brussels this week is that it has exceeded expectations, although these were
low, and marks a positive step that eases near-term pressure on eurozone
sovereign ratings. ...Eurozone leaders' decision to create a
'single supervisory mechanism' for banks is an important step towards ensuring
the long-run viability of the euro. Once such a mechanism has been created, the
soon to be established European Stability Mechanism (ESM) could recapitalise
banks directly. In Fitch's opinion, the creation of a single pan-eurozone bank
supervisor with the power to intervene and, if necessary, directly capitalise
banks could greatly improve the functioning of Economic and Monetary Union
(EMU). The International Monetary Fund has commented on the
decisions made at last night's summit. It "strongly welcomes" the decisions by
the European Council, saying the steps will help to break the feedback loop
between banks and sovereigns. It adds the decisions are "the right steps"
towards completing monetary union. The Bundestag's lower house has also approved
the ESM bailout fund. Reuters says that the lower house of the
Bundestag has approved the fiscal compact as well .
2 comments:
According to some*, it is alleged that bankers may have benefited by as much as $46 billion, thanks to the manipulation of the libor rates.
I realise that Barclays doesn’t stand accused alone, but if true, this is a MASSIVE criminal fraud for which a £290 million fine is nothing but a pathetically feeble slap on the wrist – it’s just not good enough – especially when you consider the draconian sentences handed out to those who helped themselves to a bottle of water or a pair of trainers at the other end of the social scale.
If the same judges applied the same sentencing logic to the banks as they did to looters, they would, potentially, be facing fines of £trillions or literally millennia behind bars.
It’s not good enough to leave it up to shareholders to hold banks to account. Alleged criminal activity deserves the legal scrutiny of a criminal investigation. I can’t believe how long it seems to have taken Vince Cable to acknowledge the obvious.
I think it was even suggested that a criminal investigation wasn’t appropriate because there was “no specific law” against manipulating the libor rates. Well there’s “no specific law” on the statutes which says that I can’t try to recreate the Cerne Abbas Giant on the grass of Wimbledon’s centre court, with the aid of a teaspoon and a bag of broken blackboard chalks – but there are laws against trespass and criminal damage, just as there are laws against theft and fraud.
Spain's manufacturing sector has suffered its worst month since May 2009.
June's Spanish PMI came in at just 41.1 for June, showing that output fell sharply, and at a faster rate than May (when the PMI was 42, also well below the 50-point mark that shows whether the sector expanded or contracted).
Economists had expected a weak figure, but this is even worse than they forecast. It underlines the steady deterioration in Spain's economy, which is already in recession.
We'll have a full picture of the situation in the eurozone shortly, once all the data is out.
Goodbye....Barclays chairman Marcus Agius. Photograph: Pierre Verdy/AFP/Getty Images
8.23am: There's no let-up in the pressure on Barclays this morning, despite Marcus Agius's resignation as chairman.
Labour leader Ed Miliband has already called for CEO Bob Diamond to quit too, and is also pushing for a Leveson-style inquiry into the whole banking sector.
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