{"id":648561,"date":"2013-03-25T05:46:41","date_gmt":"2013-03-25T09:46:41","guid":{"rendered":"http:\/\/blogs.reuters.com\/globalinvesting\/?p=8922"},"modified":"2013-03-25T05:46:41","modified_gmt":"2013-03-25T09:46:41","slug":"european-banks-slow-progress","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/648561","title":{"rendered":"European banks: slow progress"},"content":{"rendered":"

The Cypriot\u00a0crisis, stemming essentially from\u00a0a banking malaise,\u00a0reminds us that Europe’s banking woes are far from over. In fact,\u00a0Stephen Jen and Alexandra Dreisin at SLJ Macro Partners posit in a note on Monday that\u00a0five years into the crisis, European banks have barely carried out any deleveraging. A look at their\u00a0loan-to-deposit ratios \u00a0(a measure of a bank’s liquidity, calculated by dividing total outstanding loans by total deposits) remain at an elevated 1.15. That’s 60 percent higher than U.S. banks which went into the crisis with a similar LTD ratio but which have since slashed it to 0.7.
\n\"\"<\/a><\/p>\n

It follows therefore that if bank deleveraging really gets underway in Europe, lending will be curtailed further, notwithstanding central bankers’ easing efforts. So\u00a0the economic recession is likely to be prolonged further. Jen and Dreisin write:<\/p>\n

\n

We hope that European banks can do this sooner rather than later, but fear that bank deleveraging in Europe is unavoidable and will pose a powerful headwind for the economy… Assuming that European banks, over the coming years, reduce their LTD ratio from the current level of 1.15 to the level in the U.S. of 0.72, there would be a 60% reduction in cross-border lending, assuming deposits don\u2019t rise\u2026 This would translate into total cuts in loans of some $7.3 trillion.<\/em><\/p>\n<\/blockquote>\n

The coming storm is also likely to hit some innocent bystanders — emerging economies.<\/p>\n

For years\u00a0European banks\u00a0have led the lending juggernaut in\u00a0the developing world, accounting for\u00a057 percent of total foreign claims in these countries. A pullback is already underway: Jen and Dreisen cite BIS data showing a 4 percent fall in European lending to EM\u00a0since 2011.\u00a0But with over 90 percent of cross-border lending to eastern Europe coming from European banks, more pain can certainly be expected.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Cypriot\u00a0crisis, stemming essentially from\u00a0a banking malaise,\u00a0reminds us that Europe’s banking woes are far from over. In fact,\u00a0Stephen Jen and Alexandra Dreisin at SLJ Macro Partners posit in a note on Monday that\u00a0five years into the crisis, European banks have barely carried out any deleveraging. A look at their\u00a0loan-to-deposit ratios \u00a0(a measure of a bank’s […]<\/p>\n","protected":false},"author":7384,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-648561","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/648561","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/7384"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=648561"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/648561\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=648561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=648561"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=648561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}