The Banks in Greece, Portugal, Ireland and Spain have received two thirds of the financing of the European Central Bank (ECB) for financial institutions since the summer of 2008, writes Financial Times. Heavy dependence of these banks by the ECB signal a growing stress in the euro, as investors and other banks refused to lend to them due to fears of deepening the debt crisis. Banks in four countries have taken 225 billion of total additional 332 billion allocated by the ECB since June 2008 These countries received 68 percent of the additional funding, but on the other hand, contributed only 18 percent of GDP euro area. Published data collected by Royal Bank of Scotland. The ECB has so far not revealed the geographical distribution of liquidity it provides, and news that its funding is concentrated on only a few countries may be a political problem. Analysts say the ECB may be accused of unfair support of financial institutions in Southern Europe. This is a sign of stress in the system. Banks do not want to borrow one another, which means that many of them should seek the assistance of the ECB, says Nick Matthews, an economic analyst at RBS.
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The leaders of countries - members of the euro late last night approved an emergency meeting in Brussels rescue package of 110 billion financial assistance to our southern neighbor. The first tranche of EUR 30 billion in Athens will receive next week. “It is not about Greece. We face a systemic crisis in the eurozone, which will be an immediate response,” said President Nicolas Sarkozy, quoted by agency Reuters. “Euro area - a united Europe, and we will not allow its destruction, said the French head of state. Be recalled that approved by eurozone leaders on means of Greece were previously approved by the parliaments of the countries concerned. Some of them such as France and Germany until recently threatened not to grant aid, but finally agreed with the argument that helping Greece, EU help. These two countries are the largest financial donors - Germany granted 22 billion euros and France - 16.8 billion. The Brussels meeting was chaired by the President of the EU Herman van Rompoy and also aid to Greece have been discussed and other anti-crisis measures. Are discussed and rules for management of national budgets and strengthen them.
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The Board of Governors of the IMF will meet urgently on Sunday to approve a loan of 30 billion euros for Greece, said on Thursday spokeswoman Caroline Atkinson institution at a briefing for journalists. The loan will be extended for a period of three years and with 80 billion of loans from the EU should save severely indebted Greece. IMF believes that this financial rescue package would be sufficient to prevent the loss of Greece’s insolvency, Atkinson said: “We have built a package of financial assistance so that Greece does not have to go on the market for expensive loans over 18 months by 2012. We expect this to be enough to allow Greece to pay its debts.”
Panic grows
Despite the decision of the IMF and EU joint rescue effort, the markets react to the increasing panic of the crisis in Greece. Spokeswoman of the international financial institution said that the fears are exaggerated markets and markets demonstrate actions: “As many times we say - are not bankrupt and is not imminent. I do not want to comment on the reactions of markets, but I want to acknowledge that we do not see emerging bankruptcy.”
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Just hours before the summit of the eurozone, the Bundestag, lower house of parliament approves financial assistance for Greece and the IMF, in which Germany will contribute 22.4 billion. 390 deputies voted in favor of the bill regulating the granting of aid. 72 voted against and 139 abstentions. Shortly after the Bundestag adopted yaplan survival rates of 10-year Greek government bond reached a new record of 11.776 percent to 10.45 hours local time, announced Wednesday. The agency reminds that yesterday to yield 19 hours were 10.932 per cent. The previous historical record of the entry of Greece into the euro area was 11.142%, achieved on 28 April. Interest on the 2-year Greek bonds reached 17.787% compared to 15.910 per cent last night at the end of the day. This high yield indicates the market is a significant risk of insolvency of Greece despite aid plan of 110 billion euros by the European Union and the International Monetary Fund (IMF). Later today are voting on the bill and the Bundesrat, the upper house of parliament. State and Government of the 16 eurozone countries will meet tonight in Brussels at an extraordinary meeting to formally approve the agreement for the granting of bilateral loans to Greece and to discuss lessons learned from the Greek crisis and future of the eurozone, BTA announced by refer to the Agency France-Press (AFP). unprecedented plan to rescue Greece provides for 110 billion euros over three years, together with the International Monetary Fund (IMF).
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Today in Berlin will hold a major consultation on the Greek crisis. Chancellor Merkel and Finance Minister Schauble will meet with the Director of the International Monetary Fund (IMF) Strauss-Kahn and President of the European Central Bank, Trichet stated radio Deutsche Welle. Negotiations must be completed on May 2, and their vote will be held on May 10 during a meeting of state and government leaders from the EU and IMF. Information on the Agency France-Press (AFP), which refers to the source had access to a written document addressed to the Government of Germany Germany MPs from Parliament. According to the document of the eurozone finance ministers will discuss the outcome of negotiations on May 4, the Greek Parliament will consider the matter on 6 and 7 May and 10 May will be held video connection between the leaders of EU countries. It will then be approved a plan to help Greece, says Radio Deutsche Welle. Yesterday the situation of Greece deteriorate further, once a leading rating agency lowered further credit status. Low rating and was also indebted Portugal. This news led to the biggest drop in the rate of the euro a year now. According to AFP, the International Monetary Fund is considering allocation of additional financial assistance of 10 billion euros for Greece. Three weeks ago, when it was adopted financial rescue plan by the leaders of the eurozone, the IMF announced it was ready to loan up to 15 million this year, the total credit limit for the program is 45 million.
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The stock markets in Asia fall for second consecutive day because of ongoing concerns for the dissemination of European debt crisis. Oil then takes the third day of decline. Yesterday prestigious rating agency Standard & Poor’s lowered its estimates for Greece and Portugal. The ratings on our southern neighbor was reduced to three degrees from BBB + to BB-, the new assessment of certain debt securities as non-investment of Athens. Evaluation of Portuguese debt was transformed by two grades from A + to A-. Leading Asian stock index MSCI Asia Pacific fell 1.6 percent to 125.50 points yesterday after the broad U.S. index, S & P 500 fell by 2.3 percent. The broad European index Stoxx Euro 600 reported a decrease of 0.5%. The interest called a CDS (insurance of debt securities) in Asia rose to the top two. The euro fell heavily to 1.3187 EUR / USD dollars per barrel after yesterday around 12:20 am local time was 1.3345 EUR / USD. In the opinion of investors the markets are in panic over fears of spreading the debt crisis among the eurozone countries. Oil also reported a decline, among the reasons for the decrease was the strongest growth stocks in the U.S.. According to data from the American Petroleum Institute, they have increased by 5.3 million barrels last week.
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The prices for bankruptcy protection against the governments of Greece and Portugal reached new records today, which is in line with depreciation of the bonds issued by both parties. As a reason for this uncertainty indicates that prevails in respect of rescue loans pledged the Greek government. Greece required help with debt, from the European Union, which speed up the recovery from the hard financial crisis. The information from European Union, was that it is required from the Greek Government to enter into debt management program (DMP), which will support the financial politics of the Aegean Country. Five-year swaps to protect against non-performing its obligations (credit default swaps) for Greek government bonds jumped to a record level of 718 basis points today. This means that to protect the position of 10 million need to pay a premium of 718 thousand euros. Analysts Greece may not receive the promised help, especially if the required consents from Germany more stringent measures and plans to combat the budget deficit. As a result, speculation premium in which the biennial trade government bonds of Greece to those of Germany, jumped to 12.47 percentage points. his is reflected in another country, fall under targeted by investors - Portugal. CDS country also hit a record price from reaching 316.6 basis points.
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The holders of Greek government bonds could lose nearly 200 billion if the Government of the Aegean Country suspend or reduce payments on external debt. The agency reminds that yesterday Standard & Poor’s lowered the credit rating of the country with three levels to non-investment evaluation BB +, while says that creditors can recover between 20 and 50% of what they paid for debt securities. Greece currently has a debt of 296 billion by the end of 2009 it was 115.1% of the economy in the Aegean Country. After rating decreases investors sold out debt, which increased the interest on their redemption by 23 percentage points, with 4.6 a month ago. Bloomberg noted that this year Greek government bonds have lost 17 percent of its value.
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Almost all members of the IMF mission arrived in Athens, but will wait until Wednesday, when the Greek capital must reach representatives of the European Commission and the ECB to begin negotiations with the Greek government for financial assistance to Greece. Negotiations between the Greek authorities, IMF, European Commission and the ECB’s terms and conditions for providing loans to Greece had to start today. It is envisaged that this year Greece to be granted credit for about 45 billion euros, while Athens has not been officially asked to be activated this mechanism. Be recalled that the last working day of last week, Greek Finance Minister George Papakonstantinu formally requested consultations are to begin granting of financial assistance from the European Union and the International Monetary Fund (IMF) to obtain a loan Greece Low interest. A few hours later, however, before the Greek Parliament, Prime Minister George Papandreou said that the establishment of a mechanism for assistance from the EU and the IMF is a huge step forward for Europe and acknowledges the efforts of his government to deal with the Greek deficit.
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The single European currency fell to its lowest value for the last 10 months because of continuing concerns about the fiscal crisis in Greece, reported the site of the British radio BBC. Burden of 300 billion euro obligations, which is our southern neighbor, the euro exchange rate fell to levels of 1.3436 EUR / USD, which is the lowest point for the single currency in May 2009. At the same time British pound continues to be marketed for the sixth consecutive day in the red sector against the dollar. Today the pound is a decrease of 0.4% to 0.9053 USD / GBP. Recorded by the BBC that Britain and the euro area Member States - Greece, Spain and Portugal, have serious obligations which nervous financial markets because of concerns that they may have problems with their payments. It is expected that Prime Minister Georgeos Papandreou of Greece to visit Germany’s Chancellor Angela Merkel in Berlin on Friday.
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