Many Banks in Europe Face Funding Difficulties
Sources: Economist: Cutting It Fine Bloomberg: European Bank Funding Threatened as Basel III Meets Solvency II FT: Banks Endorse Option of Creditor ‘Bail-in’ ; Brussels to Target Bondholders on Bail-outs In many European countries, the maturities of bank debt have shortened dramatically in 2011 compared to 2006, according to data provided by Dealogic. In particular, in countries having sovereign-debt problems such as Greece and Portugal, the maturities of bank debt have fallen more sharply. In other countries such as Spain and Italy, banks also face funding difficulties and have been issuing more short-term bonds or paying higher yields. In the case of Italy, banks pay higher yields on their bonds by 1-1.5 percentage points than banks in France and Germany. Having more short-term funding is worrying because it makes banks vulnerable to a sudden liquidity dry-up in short-term funding markets as it happened during the recent global financial crisis. On the other hand, banks in some count...