JohannesBorgen Profile picture
Jun 30, 2021 8 tweets 5 min read Read on X
Even if the @EBA_News headlines tries its best, it’s hard to find bad news in their latest risk dashboard on European banks: capital is up, NPLs are down, profitability jumped sharply…
@EBA_News When you think about it, it’s crazy how the Covid fears were exaggerated (more on why below.) I mean, look at this: even the most affected sector only saw a very modest rise in NPLs. A 25% scenario would not have been absurd! We're barely at 9% vs 8% in Q1 2020.
@EBA_News Payment holidays on loans are in freefall, with meaningful # only remaining in Spain, Italy or Portugal.
@EBA_News And what’s happening to expired ones? Can borrowers repay?

Well, there are NPLs, of course, but tbh the amounts are very modest and way lower than expectations from a year ago.
@EBA_News So can we find bad news?

Yes, I’d mention two important ones.
@EBA_News First, losses are starting to bite in the public sector.

Those guaranteed loans will cost a lot of money.

It’s a jeuasommenulle after all (=zero sum game)!

While banks’ NPLs are going down, the government ones are going up – sharply !
@EBA_News And the second bit of bad news, courtesy our good friend the ECB: look at the net interest margin ! It’s in freefall!

This can’t last forever, even with all the creativity of the ECB (tiering, TLTROs, etc.)
@EBA_News But of course, all this is very important but the absolute worst thing is that…

For the first time, UK data is gone ☹ #Brexit

I’m probably the only one in the world who cares, but I do care !

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More from @jeuasommenulle

Mar 5
A week ago the Swiss gvt bravely decided to leave the decision on UBS capital requirement to Parliament.

I’m not sure that was such a great idea – as the recent proposal of the Swiss Social-Democratic Party shows.

If implemented, it would be a massive game changer. A thread.
First, a reminder: the SDP is not a fringe party, they’re #2 in the National council (41/200) & #3 in Council of States (9/46) & they’re also not particularly extreme (I mean, Swiss rarely are.)

But their proposals for UBS are a bit wild.

Let’s unpack.
1) A new leverage ratio surcharge of 3% for assets >300bn$ - in practice it means 40bn$ more capital required (out of approx 85bn of equity).

Ouch.

And having the biggest req on a non-risk adjusted basis is not exactly a very safe approach imho
Read 12 tweets
Mar 3
Tomorrow is the end of the grace period for fentanyl-related tariffs (Canada Mexico), China ones r supposed to start on March 12. Time to look at some numbers. So far Trump has enacted 10% “fentanyl” tariffs on Chinese goods, enacted and cancelled 25% on Columbia and threatened :
Canada, Mexico (25% goods + 10% Canadian energy), China (+10% addtl), 25% steel & aluminium worldwide, “fees” for Chinese ships/freight operators, “reciprocal tariffs” (whatever that means) for all nations + 25% autos pharma & lumber, + unknown % on copper.
We’ll know more after the report on ‘America First Trade Policy’ on April 1st, especially on "reciprocal ones", but here are few thoughts from a great Autonomous report on this.

Some historical perspective: maybe raising tariffs in the early 1920 wasn’t a great idea? Image
Read 13 tweets
Feb 28
You should watch the full unedited version of this unreal press conference All going as expected (Trump w/ his weird obsessions, Z trying to stay cool, Rubio wishing he was in bed) until it totally blows up bc Z can't help correcting Vance about diplomacy

The best summary of the twisted world we live in is how Trump ends the press conference:

"This is going to be great television"

You can't make it up
Also : the journalist who asked the suit question should really look at himself in the mirror tonight bc it clearly contributed to the unravelling of the meeting
Read 4 tweets
Jan 10
This is pure gold, Greek edition.
How did Eurobank achieve such an increase in capital ratios, in Q3 24? The trick is in the +99bps.
Which comes from a mysterious decrease of 2.4bn€ in RWA. But how? Deleveraging?
Oh no, that would be hard work. I’ve got a better idea.
Thread. Image
It’s obviously the ICAP CRIF CQS, you idiot. Err, what?
Here’s the explanation, & it’s beautiful.
Under Basel/EU rules, banks using the standard approach (no internal ratings) have capital charges (RWA) based on external ratings which are then mapped on so-called “Credit Quality Steps” that give RWA using this table. Image
Read 10 tweets
Oct 29, 2024
BNP has very good notes on the US elections and how to trade them. They are mostly focused on timing and the info you should focus on. Here's my summary
Before the elections

Apart from betting markets / polls, a source of info is mail-in ballot statistics.

Early voting doesn’t favor the Dems as much as 2020 (but Covid). Image
Before the elections

Some states - notably Wisconsin, Pennsylvania, Georgia, Michigan North Carolina - start counting on Nov 5th. They are important states so could provide info.
Read 14 tweets
Oct 29, 2024
Maybe you’ve seen the crazy price action on Close Brothers last Friday or heard about the Hopcraft appeal court ruling and its impact for UK banks.

What is it about?

I’ll try to explain why it’s important but not Armageddon. Image
This is all about getting financing when you buy a car, more precisely getting so-called “Point of sale” financing, i.e. the car dealer acts as broker for the actual bank or finance company providing the loan.
Back in 2021 the FCA banned a dubious practice: the broker’s fee was higher if the loan rate was higher, i.e. there was an incentive to propose a bad client deal. The Financial Ombudsman Service ruled (on pre-ban sales) with an indication of how redress should be calculated.
Read 12 tweets

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