Daily Insight
Group Economics Macro & Financial Markets Research
13 April 2016
Italy’s bank fund
Italian government announces private bank fund to help problem banks raise capital…
Tomas Kinmonth Credit Strategist
Tel: +31 20 628 1405 tomas.kinmonth@nl.abnamro.com Nick Kounis
…but may need bigger scale to deal with enourmous non-performing loan problem
IMF lowers global growth forecasts and warns on risks…
…calls for co-ordinated G20 policy response (probably in vain)
Head Macro & Financial Markets Research Tel: +31 20 343 5616 nick.kounis@nl.abnamro.com
Italy announces EUR 5bn private fund to help problem banks The Italian government announced that a private fund would be set up, to be initially financed to a level of EUR 5 billion, to deal with the country’s problem banks. The fund will be financed by the larger Italian banks (UniCredit, Intesa Sanpaolo and UBI Banca) along with insurers and institutional investors. Quaestio Capital Management SGR will be the manager of the fund as the Italian government is restricted from management of the fund as that would be direct state participation. The fund will act as a buyer of last resort for banks that struggle to raise equity capital in the private markets and / or are unable to sell junior tranches of their securitized non-performing loans (NPLs). As a compliment to this measure, the government plans to pass tougher bankruptcy laws in the near term to help banks to recover NPLs more quickly. Cash calls may be covered, but NPLs more challenging A number of smaller Italian banks need to raise capital to meet regulatory requirements. The fund seems big enough to support initial issuance by these institutions even in the case that investor demand proves to be weak. However, the NPL issue may prove to be a tougher nut to crack, with the current size of the fund potentially proving insufficient. NPLs are large and still rising, while it is unclear how much investor interest there will be from investors for junior tranches. We will publishing a more detailed note on this issue shortly. IMF downgrades global outlook and warns on risks Meanwhile, the IMF downgraded its global economic forecasts once again, and warned of the risk of a return of financial turmoil, secular stagnation, as well as shocks from political risks, including the rise of populism in the US and eurozone and Brexit. It now sees global GDP growth at 3.2% in 2016 (ABN AMRO: 2.9%) revised down from 3.4% in its previous update. It lowered its projections for the US (2.4% from 2.6%), eurozone (1.5% from 1.7%), Japan (0.5%
Insights.abnamro.nl/en
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Daily Insight – Italy’s bank fund – 13 April 2016
from 1%), the UK (1.9% from 2.2%), Brazil (-3.8% from -3.5%) and Russia (-1.8% from -1%), but upgraded its China growth forecast on resilient domestic demand (by 0.2 pp taking it in line with the authorities' growth target of 6.5%). The IMF assessment of a weak global growth outlook is broadly in line with our own base case and risk outlook, though we are somewhat more pessimistic on economic growth, in particular in the US and Europe. The IMF also made a plea for a global co-ordinated economic policy action at the G20 level. The IMF’s Chief Economist Maurice Obstefeld asserted that ‘by clearly recognizing the risks they jointly face and acting together to prepare for them, national policy makers can bolster confidence, support growth, and guard more effectively against the risk of a derailed recovery’. He may as well have been talking to a brick wall if recent G20 initiatives are anything to go by.
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Daily Insight – Italy’s bank fund – 13 April 2016
Day
Date
Time
Country
Monday Monday Monday Monday Monday
11/04/2016 11/04/2016 11/04/2016 11/04/2016 11/04/2016
01:50:00 03:30:00 03:30:00 15:25:00 19:00:00
JP CN CN US US
Machinery orders private sector - % mom CPI - % yoy PPI - % yoy Fed's Dudley (voter) speaks in NY Fed's Kaplan (non-voter) in Louisana
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
12/04/2016 12/04/2016 12/04/2016 12/04/2016 12/04/2016 12/04/2016 12/04/2016
10:30:00 12:00:00 14:00:00 15:00:00 21:00:00 22:00:00
DE GB US IN US US US
CPI - % yoy CPI - % yoy NFIB small business optimisme - index CPI - % yoy Fed's Harker (non-voter) speaks on Economic Outlook Fed's Williams (non-voter) speaks Fed's Lacker (non-voter) speaks
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016 13/04/2016
15/04/2016 15/04/2016 15/04/2016
CN CN CN CN CN EC EC US US US CA US US
New loans - CNY bn Aggregate financing - CNY bn M2 money growth - % yoy Exports - % yoy Imports - % yoy ECB's Knot in Dutch Parliament to discuss ECB Monetary Policy Industrial production - % mom Retail sales - % mom Prod. prices index excl food and energy - % mom Prod. prices index - % mom Policy rate - % Business inventories - % mom Fed's Beige Book
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday
14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016 14/04/2016
11:00:00 13:00:00
EC GB GB US US US US US US
Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday
15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016 15/04/2016
CN CN CN CN JP EC US US US US
10:00:00 11:00:00 14:30:00 14:30:00 14:30:00 16:00:00 16:00:00 20:00:00
14:30:00 14:30:00 14:30:00 14:30:00 16:00:00 16:00:00 04:00:00 04:00:00 04:00:00 04:00:00 11:00:00 14:30:00 15:15:00 16:00:00 18:30:00
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Feb Mar Mar
-9.2 2.3 -4.3
-11.9 2.4 -4.6
Mar F Mar Mar Mar
0.3 0.5 92.6 4.8
0.3 0.4
Mar Mar Mar Mar Mar
726.6 780.2 13.3 -25.4 -13.8
1100.0 1400.0 13.5 10.0 -10.1
Feb Mar Mar Mar Apr 13 Feb
2.1 -0.1 0.0 -0.2 0.5 0.1
-0.6 0.2 0.1 0.3 0.5 0.0
Core inflation - % yoy Policy rate - % BoE size of asset purchase programme - GBP bn Inflation excl food and energy - % mom Inflation excl food and energy - % yoy Inflation (CPI) - % mom Inflation (CPI) - % yoy Fed's Lockhart (non-voter) speaks Fed's Powell (voter) appears before Senate Banking Committee
Mar F Apr 14 Apr Mar Mar Mar Mar
1.0 0.5 375.0 0.3 2.3 -0.2 1.0
1.0 0.5 375.0 0.2 2.3 0.3 1.1
0.2 2.3 0.3 1.1
Retail sales - % yoy Industrial production - % yoy Fixed investments - % yoy GDP - % yoy Industrial production - % mom Trade balance external EU - EUR bn Empire State PMI - Manuf. general business conditions - index Industrial production - % mom Univ. of Michigan cons. confidence - index Fed's Evans (non-voter) speaks on Economy and Policy
Mar Mar Mar 1Q Feb F Feb Apr Mar Apr P Apr P
10.2 5.4 10.2 6.8 -6.2 21221.2 0.6 -0.5 91.0 91.0
10.4 6.0 10.4 6.7
6.7
1.3 -0.1 92.2 92.2
-0.2 93.0 93.0
ABN AMRO
5.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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