Friday, May 25, 2012

Without another ECB liquidity program, Spanish banks to run out of liquidity by end of summer

According to the International Financing Review,

Spanish banks may need further long-term loans from the European Central Bank - citing bankers advising the lenders. 
“Liquidity is a big concern,” said the head of Spain at one investment bank advising lenders. 
“Some have money to get them through the summer, but by the autumn if we haven’t seen additional measures then they could be in a very difficult situation.” 
“The only way out is another bazooka,” he added, adding that some banks will need further loans from the ECB and a possible injection of capital.
Is this true?

Without ultra transparency under which banks are required to disclose their current asset, liability and off-balance sheet exposure details, there is no way for market participants to know.

It is this lack of information that could easily turn statements like this into a full fledged run on the bank.

No comments: