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Did Another European Bank Just Lose LTRO Eligibility?
Back on the 11th of May, something very curious happened: the ECB's line item 5.2 from its "Consolidated financial statement of the Eurosystem", or in other words, the LTRO money handed out to various European banks, dropped by €10.8 billion. There is one problem with this: this number is not allowed to decline. Or technically, if it does, it means something is wrong.
This is how Reuters explained the first instance of a material decline from May 4: "An early repayment of 11 billion euros of low cost funding to the ECB last week may be due to a bank losing its eligibility as a counterparty or a shortage of collateral, underscoring concerns about the general health of the banking sector. The European Central Bank's weekly financial statement showed that 10.8 billion euros ($14 billion) of longer-term refinancing operations (LTROs) were repaid last week before maturity. This is unusual because banks are not permitted to repay such funds early. There are exceptions for the December and February three-year funding operations but even those officially cannot be repaid before one year has passed. "When pledged collateral becomes ineligible and the counterparty cannot come up with a replacement ... cash out of the open market operations has to be paid back," said Commerzbank rate strategist Benjamin Schroeder in a research note. "A case where an institution itself loses its status as ECB counterparty is also conceivable." According to the ECB's website, the central bank's counterparty eligibility criteria include being subject to the Eurosystem's minimum reserve system and being "financially sound".
Well, minutes ago the ECB just reported its latest May 25 weekly update, and the number was... a €21.4 billion drop.
Chart: BBG
Which begs the question: just which bank got kicked out by the ECB, which is well known to accept the worst of the worst when it comes to collateral, just how bad is the collateral situation in Europe if banks can't even be LTRO eligible, and just what will be the systemic implications if said bank is unable to fund itself in the open market which as everyone knows by now in Europe, is completely and thoroughly frozen?
And for those asking, here is the ECB's Emergency Liquidity Assistance (ELA) timeline:
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That outta push the dow up another 200 pts
>>"That outta push the dow up another 200 pts"<<
Rumors of China easing BIG time and QE4 as a certainty help pump up the ponzi...
PS... HSBC... shhhhhhhhhh
And gold way down. They will manage to ruin all the central banks in the world when the euro (and gold) collapses for good.
Bank runs = rejection of banks = rejection of entire polical systems build upon a foundation of debt financing
This should lead to the rise of politicians who are vocally anti-bank. Big changes are brewing. There is a limit to how much cyber money can be created before the system irretrievably collapses, and while no one knows exactly where that point is, it's becoming pretty obvious that we are getting closer, and closer, and closer.
Ron Paul anyone?
Unless we get some mega event to push enough delegates to vote in Ron Paul at the Republican convention, or to convince him to run as an independent, and I think those are both very long odds, I don't think he'll ever make it.
But maybe his ideas will gain enough traction to have the major impact that is needed. Unfortunately, I don't see that happening BEFORE any major disaster.
I think its JP Morgan...you know the bank from across the pond!
"Or technically, if it does, it means something is wrong."
There is nothing wrong. Ignore all that you see and hear. You have just crossed over into the Twilight Zone.
http://www.youtube.com/watch?v=NzlG28B-R8Y
bailouts? ltro's? qe? op twist?
what could possibly be wrong...
Captain,Mario D. just lowered the counterparty requirement. No worry. Everything is fixed.
today has the same feel as nov 28, 2011. euro banks were imploding and ben gave advance notice to the banks he was about to bail out europe with the USD swaps, which werent announced until nov 30.
Bernanke, always thinking of the US Taxpayer first. What a guy!
does this happen when a bank gets nationalized?
e.g. in Spain?
That would be my vote. Nationalized is not financially sound. Any bank not financially sound means "no soup for you".
Lets get the proper spin on this "21.4B surge in European LTRO funding capability"....... Please make these stories easier for the Algos to process....
"ECB paid back ahead of schedule; green shoots!"
Tuesday: Party
Wedensday: Party
Thursday: Party
Friday: Party
Party Party Party
Every day I'm shufflin'
Shin Chan!
Better rush in to buy treasuries, bullish for USSA
Gee, they can finally set income on -10% nominal on treasuries.
Everybody checks to Fed. Fed comes up with 2 trn non fungible non lossabe dollars.
It means banks are well capitalized and we can can now resume full recovery retard programming on CNBS...oh, wait, that programming never ceased.
http://www.youtube.com/watch?v=RORPpFL21dM
Just discover this movie.Hope is interesting.With english subtitles.
Don't worry people. Probably just a small bank like Santander. Not systemically important. This is anti bailout progress here! Should be goo for 20 more ES points. To the moon Alice!
That cant be, we got high Hopiums for QE now!
The market is on psychotrophic drugs this morning. Up 1.23% at 10:53 AM. Absolutely unbelievable !!
Why are you surprised? When you get a 7% correction in prices and a lot of bad news is foating around, it's perceived as "priced in". Earnings momentum is still there, for the time being.
We are subject to very large retracements with all this cheap money flopping around. Use it to your advantage.
Spanish cajas took in lots of LTRO funds before they were rolled up into Bankia. Nationalizatin by the Spanish govt may have caused those LTRO loans on ECB books to go "poof" or at least move somewhere else. Think: Cat in the Hat Comes Back... many little cats hiding under a hat and a spreading pink stain.
Bankia --> Simple
Bankia would sure be my first guess. Bank restates and reports losses rather than profits, requires 20 billion in a govt. recap, what more would be required to make them inelligible or indicate that the bank is unsound?
off topic (sort of) but everything is so interconnected and mucky i'm not convinced it isn't somewhat/somehow relevant to the general indigestion...please, does anyone have ideas regarding the ever unruffled tony blair and his heckler? the heckler accused tony blair of being paid off by JPMorgan...or at least money mysteriously drifted through JPM?
Yes the ECB just switched on their shredder
WHAT AM I MISSING OTHER THAN THE MARKET CLIMBS A WALL OF WORRY AND HORRIBLE ECONOMIC DATA MEANS FED TO THE RESCUE AGAIN. IS IT AS SIMPLE AS THAT?????
Markets are oversold, worldwide. They need to burn off this condition. Expect a deep retracement.
This is going to blow up....the fuss is long enough to last untill about Dec...max
If we are lucky........or so they say..
History is repeating itself right before our eyes...Inflation cycle / deflation ?
This time it is different...yea right !
Choose wisely....probably the most important desision in our life time
The euro=gold trade is alive and well, regardless of the news or the other markets. Euro down, gold down.
It still doesn't make much sense but it is amazingly true.
The animals are out of their cages and running wild in the zoo. Ice-nine is crackling as it criss-crosses its way up the outside of the south shore wall toward the field where a rhino's got the zookeeper trapped up a tree.
Stupid idiot Rhino. Should have pushed the tree down.
I know one thing that will snap the market like a dried out twig.
A nuclear strike somewhere important.
I have a picture of another zookeeper watering the Desert with a garden hose.
Ok, ok, ok... it was in Hershey Zoo at the Reptile building.
"A nuclear strike somewhere important."
In related news, the Olympic torch just passed by here. Never seen so many cops on one small High Street! Wouldn't want anything to happen to it before the big day, now would we!
My backup guesses are Portland and Atlanta - something is ticking in the back of my mind that won't go away regarding those two cities. There's just something... odd... about the frequency and tone of mentions of them in the media and online, dating back a couple of years - but nothing I can actually pin down. Anyone else picked up a weird vibe about them???
VAPORIZED!
Doesnt this just about explain the larger Bankia bailout figures that surfaced. 19B Europees + this 21B Europees total bailout needed for bankia 40B europees
This is bad news, but at least there are no bank runs going on anywhere.
Xerox machine. Filing cabinet. Stapler.
Who said we have no collateral left ?