1-Aug-14
Investors received a more stringent regulatory and financial balance sheet of the two lending institutions under scrutiny Thursday brought announce record losses for European banks, the risk despite the improvement in the economic outlook, a harsh reminder.
Espiritu Santo in the bank fell 40 percent after the Bank of Portugal ordered the countries biggest banks to raise new capital, and said "harmful management" former board member of the legal consequences might face.
In France, BNP Paribas reported a record loss of € 4.32bn in the second quarter, from a fine to pay almost $ 9 billion of French bank Societe Generale in violation of United States sanctions effect in May, Sudan, Iran and Cuba tingling.
The message is to conduct a comprehensive assessment process for the European Central Bank - to clean up the balance sheet of the lender before the introduction of the European banking union later this year.
"People have moved to underweight the banking sector in the summer," Berenberg analyst James Chappell said. "I do not think people will come back department, until we pass a comprehensive assessment of the process of the ECB."
When a small number of large European financial institutions, including Santander, the euro zone's largest bank, reported first-half results on Thursday, the broad economic rebound to boost basic earnings for the provision of non-performing loans declined the net interest margin to rise.
But in France and several other groups, misconduct and regulatory issues involved overshadowed the overall positive picture.
In the UK, Lloyds Banking Group set aside £ 600 million more for payment protection insurance miss-selling claims, taking its total funding report, almost 60% decline in pre-tax profits for the first half year legal problems over £ 10 billion.
Austrian Erste Group fell to € 10.3 ? net loss in the second quarter as it wrote down the business in Romania, Hungary and set aside funds to meet legal force banks to compensate the borrower's foreign currency loans.
The biggest surprise so far are from BES Portugal, which started June 1 billion € ECB's capital stress tests and asset quality review ready. Its prospectus, facing the Espirito Santo family, serious difficulties of the bank's 25 percent of the large shareholders.
"These losses hidden in the bank's balance sheet continues to be cracked, because people are unable to support these debts," Chappell said.
BES is working hurriedly patched up by the private sector lender posted a replenishment Portuguese net loss in the first half of € 3.58bn, in order to avoid the government's rescue. This half of the ordinary share capital ratio - an important measure of a bank's strength - to 5 percent, lower than the minimum regulatory requirements of 7 percent.
"These banks have passed a lot of economic pressure, and a great balance sheet, which is the stress testing and quality review of assets ECB is trying to establish a clean slate entire industry," Nomura analyst Daragh Quinn said .
Analysts said, BES may be difficult to convince investors within a few months led to a second capital increase.
Although nearly 40% of buying stocks at a discount, investors who took part in the Beijing Spectrometer € 1.04bn capital increase in June have seen their stock value fell by more than 75%.
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