American banks have recovered well many European ones much less so文档格式.docx

American banks have recovered well many European ones much less so文档格式.docx

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Americanbankshaverecoveredwell;

manyEuropeanonesmuchlessso

MostEuropeanbankswereslowoffthemarkafterthecrisis

“THESHORTANSWERisHankPaulson,”snortsaEuropeanbanker.“TheygotTARPed.”ThequestionhadbeenwhyAmerica’sbanksrecoveredsomuchfasterthanEurope’sfromthedebacleoftenyearsago.WithindaysofLehman’sdemisein2008MrPaulson,thenAmerica’streasurysecretary,forcedthebanks,aswellasAIG,agiantinsurer,andothercompaniestotakeequityinjectionsfromthefederalgovernment,whethertheyneededandwantedthemornot.

TARP,theTroubledAssetReliefProgramme,atfirstearmarkedaround$700bnforcompaniesindifficulty.Thatwaslatercutto$475bn,ofwhich$245bnwaspumpedintobanks.Withinterestanddividends,thebankseventuallyrepaid$275bn,havingreplacedpublicmoneywithprivatefunding.In2014thegovernmentsolditslastsharesinaTARPbank:

AllyFinancial,formerlythefinancialwingofGeneralMotors.

TherecapitalisationofEurope’sbankshasbeenasgradualasthatofAmerica’swasswift,andindribsanddrabsoftensofbillionsayearratherthaninonebigsplurge（seechart）.Itisstillcontinuing.SofarthisyearDeutscheBankandUniCredit,thebiggestlendersinGermanyandItalyrespectively,haveraised€21bninnewequity.

Europeanbankscouldhavedonealotmoresooner.HyunSongShin,oftheBankforInternationalSettlements,calculatesthatbetween2007and2015,90euro-zonebanksretained€348bnoftheirearningsandpaid€223bnindividends.Hadtheykeptthelot,theywouldhavebeenabletostuff64%moreintotheirequitycushions.Becausestrongerbankstendtolendmore,MrShinadds,profits,earningsandcapitalwouldhavebeenthatmuchhigheriftheyhaddoneso.

NicolasVé

ron,ofBruegel,aBrusselsthink-tank,andthePetersonInstituteforInternationalEconomicsinWashington,DC,contrastsMrPaulson’s“toughlove”favourablywiththereactiontothefinancialcrisisofnationalsupervisorsinEurope.Authoritiesintheeuroareaweretooconcernedwithprotectingnationalchampionsfromembarrassment,hesays,“astoryverymuchofforbearanceanddenial”.BritishandSwissregulatorswerequickerthantheircounterpartsintheeurozone,bailingoutLloyds,NorthernRock,RBSandUBS,evenifBritishtaxpayerspaida“scandalouslyhighprice”tosaveRBS.

StresstestsbyEuropeanauthoritiesweresometimeswayoffthemark.Forexample,theygaveIreland’sbankingsystemacleanbillofhealthin2010,justbeforeitcollapsed,andin2011allowedDexia,aFranco-Belgianbank,topasswithflyingcoloursjustafewmonthsbeforeitwascaughtbyexposuretoGreeksovereigndebtandbailedoutbythegovernmentsofBelgium,FranceandLuxembourg.

Theauthoritieseventuallygottheiracttogether.Spain’sbankingsystem,forinstance,ismuchthestrongerforaconsolidationeventuallyco-ordinatedbythestate,althoughweakspotsremain.Several 

cajas 

（localsavingsbanks）clobberedbythecountry’spropertybustwerefoldedintomorerobustinstitutions.Agrandtotalof55bankshasbeenreducedto14.Severalleadinglenders—Santander,BBVA,CaixaandSabadell—havealsoexpandedabroad.

UnlikeAmerica,theeurozonedidhaveasecondcrisistodealwith,whichposedathreattoitsverysurvival;

anditwasonlyinresponsetotheeurocrisisthatacommonbankingsupervisorwascreatedwithintheEuropeanCentralBank.TheSingleSupervisoryMechanism（SSM）hasbeenupandrunningforjusttwo-and-a-halfyears.Itdirectlysupervisestheeuroarea’s126mostimportantbanks（thebiggestinthezone,plusthosecriticaltonationaleconomies,bigorsmall）,agroupthataccountsfor80%ofthearea’sbankingassets.Oversightoftheremaining3,200lendersisdelegatedtonationalauthorities.

Aunionofsorts

Europe’s“bankingunion”,ofwhichtheSSMisacentralelement,remainsincomplete,partlybecauseGermanpoliticiansbalkataplantoinsuredepositsacrosstheeurozone.Rulesonbankingsupervision,moreover,arestillinconsistentlyapplied.“Weneedregulations,notdirectives,”saysDaniè

leNouy,theheadoftheSSM.（HerpointisthatEuropeanUnionregulationsareadoptedautomaticallybymemberstates,whereasdirectivesrequireimplementationbynationalparliaments.）ThedirectivetranslatingBasel3intoEUlawcontainedmorethan160nationaloptions.Asinglecapitalmarketisalsostillfaroff.

ThesedaysEuropeansupervisors’mostpressingproblemisItaly.Baddebtsthatseemedmanageablebackin2007grewintoamountain,reaching€360bn（atgrossvalue）by2015asItaly’seconomyfailedtogrow,borrowersranintotroubleandbanksandsupervisorsprocrastinated.Jean-PierreMustier,thenewishFrenchbossofUniCredit,isknockingthebiggestbankintoshape,writingdownbaddebtby€8.1bn,sellingassetsandraising€13bninequity.IntesaSanpaolo,thenext-biggest,hasbeenindecentshapeforsometime.Butthefourth-largest,BancaMontedeiPaschidiSiena,ispinneddownbyitsbaddebtsandawaitingstateaidforthethirdtimewithinafewyears.BancaPopularediVicenzaandVenetoBanca,twosmallerbanksthatplantomerge,arealsoseekingabail-out.

TheSSMwantstobesurethatthebankswillatlastbewellcapitalised.InDecemberittoldMontedeiPaschithatitwouldneed€8.8bn,buthassincedeemeditsolvent.However,bail-outsmustbeapprovedbytheEuropeanCommission,whichoverseesrecentlytightenedstate-aidrulestodiscouragecontinuingcallsontaxpayers.

Thestate-aidrulessaythatjuniorbondholdersaswellasshareholdersshouldbe“bailedin”—ie,wipedout—ifabankhastoberescued.ButinItalymanyretailcustomersboughtbankbondsbelievingthemtobeassafeasdeposits.TheItalianauthoritiesaredesperatetofindawayofcompensatingthemthatsatisfiesthecommission.Abail-inatsmallerbanksinlate2015causedpoliticaluproarandresultedinatleastonesuicide.Precedentsuggeststhatasolutionshouldbepossible;

holdersofsimilarSpanishbankbondswerecompensatedforfallingvictimto“mis-selling”.

ButEuropeanbanks’plightstemsfrommorethanjustbeingslowtorecapitaliseandsortoutbadloans.Somecountries,notablyItalyandGermany,havetoomanybanksandbranchesforallofthemtoflourish.Alongperiodofultra-lowinterestrateshasflattenedmargins.Germanbanks,whichrelyoninterestforthree-quartersoftheirincome,thehighestproportioninanyOECDcountry,havebeensquealingalmostasloudlyassavers.ApaperrecentlypublishedbytheBundesbankforecaststhat,ifratesremainconstant,amere20%oflenderswillearntheircostofcapital（estimatedat8%）by2020;

lastyear60%did.

ThomasOlsenofBain,afirmofconsultants,arguesthatbeforethecrisis,andevenforseveralyearsafterwards,bankseverywhere“didn’treallyhavedifferentstrategies”.Tightregulationhadtraditionallylimitedtheirscopeforexperimentation,butinthehelter-skelteryearsleadingupto2007-08banksgrewindiscriminately,spreadingintoasmanycountriesandareasofbusinessastheycould.Afterthefall,“theydidn’thaveastrategythen,either:

theywerejustfirefighting.”Asthedustsettled,theyhadtodecidewhatstrategytoadoptandhowtoputitintoeffect—oftenbyretreatingfromunprofitablemarketsandactivities.

ToomanyEuropeanbankshavebeenslowtodustthemselvesoff.Someatleastwentintothecrisiswithrobustbusinessmodels—andthereforedidnotneedathoroughshake-up.Santander,whichhadbuiltretailandcommercialbankingbusinessesinanumberofcountries,fromChiletoBritain,waswellplacedtowithstandthestorm,eventhoughitshomelandtookabattering.Itistheeurozone’sbiggestbankbymarketvalueandhasmademoneyineveryquartersinceatleastthelate1950s.Likemanybanks,ithashadtoturntoshareholderstoboostcapital,raising€7.5bninJanuary2015.Itssharepriceisjustashadebelownetbookvalue.ByEuropeanstandardsitisdoingfine.

ContrastthatwithDeutscheBank.Thisusedtobeaslightlystaidinstitution,servingGermany’sbiggestcompaniesathomeandabroadandlookingafterwell-offretailcustomers;

butlongbeforethecrisisithadventuredfarfromthatmodel,choosingthebuccaneeringlifeofinternationalinvestmentbankingandtrading.By2007itwasleveragedtothehilt,withequityamountingtoonly2%oftotalliabilities,one-thirdoftheratioatSantander.Thecrisisdealtitaheavyblow.

Notquiteü

beralles

DeutscheisthebiggestbankinEurope’sbiggesteconomyandhasnotneededstateaid,butithashadtoturntoshareholdersthreetimesinsevenyears,tappingthemforatotalofmorethan€20bn.DespitearallysincelastSeptember,itsshareshavebeeentradingatonlytwo-fifthsofbookvalue.ThisJanuaryitconcludeda$7.2bnsettlementwithAmerica’sDepartmentofJustice（DOJ）,whichhadaccuseditofmis-sellingresidentialmortgage-backedsecuritiesinthewildpre-crisisdaysof2005-07.（SomeotherEuropeanbankshaveyettosettle;

Americanoffendershavealreadypaidheftypenalties.）Thebillwaslessthanfeared:

initiallytheDoJhaddemanded$14bn,andonly$3.1bnofthesettlementhastobepaidincash.

Nowthisisoutoftheway,Deutschemayatlasthavearrivedatanenduringstrategy.InMarchJohnCryan,itschiefexecutivesince2015,decidedtokeepPostbank,aretailoperationhehadpreviouslyintendedtosell,shoringupDeutsche’sdepositbaseinGermany.Toboostitsratioofequitytorisk-weightedassets,akeyregulatorymeasureofresilience,Deutschehasinsteadraisedanotherslugofequity,€8bn-worth,andissellingpart