Gretchen Morgenson of the New York Times in her piece Lessons From the Collapse of Banco Popular reminds us of the continued perilous state of the European banking system, which never properly deleveraged after the Financial Crisis…Banco Popular, Spain’s fifth largest bank, was suddenly sold in a government-sponsored rescue to Banco Santander… This was the first application of the Eurozone’s new bail-in rules… Banco Popular’s “additional tier” subordinated notes were trading at 100 in April… They were trading at 50 before the sale, and are now worth 0… Liquidity (meaning the ability to actually sell) was minimal between 100 and zero… Banco Popular will not be the last of these bank rescues in Europe, for sure…
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