Via Economico, I learn that Millenium BCP, another of the 4 large Portuguese banks, has 2.5bn of Portuguese debt, 0.7bn of Greek debt, and 0.2bn of Irish debt.
Total assets, 97bn, own funds 6bn.
Overall, in better shape than BPI to withstand a possible restructuring of sovereign debt.
Friday, 29 April 2011
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The question I believe is why do banks buy Government Bonds? If their three main sources of funds are: Equity, Bonds and Deposits. The first two are more expensive than the yield of a Government Bond so in theory they shouldn't use these funds to buy these assets.
ReplyDeleteThe third are funds guaranteed by the Government that have a low cost, maybe makes sense to use them to buy Government Bonds...
@ Ricardo Reis
ReplyDeleteOne correction to keep the facts straight:
As per company's presentation, Millennium now holds €2.2bio of short-term Portuguese debt (less than 12 month) and €3.0bio of over 1yr debt. Total is €5.2bn. Of those, 2.6bn are on the "trading boook" and the rest on the banking book.
Therefore, €5.2bn in Portuguese Public Debt, €0.7bn in Greek PD, €0.2 in Irish PD.
Total Assets is €96,6bn and total Equity is €7,2bn.
Total loans: €75,3bn (€30,7bn Mortgage, €4,7bn Consumer, €40bn Corporate). Total Default ratio (overdue loans above 90 days) 3.4% being 0.6% in Mortgage, 10.8% in consumer and 4.6% in Corporate (9.2% on construction). Of that, there is a total coverage of 103.8%, being 90.5% coverage on Mortgage, 82.4% on consumer and 111.2% coverage on Corporate (construction with a very bad coverage ratio on 70.9%).
€14.7bn assets used as collateral on ECB loans, €1.5bn as collateral in Repos operations, €3.9bn unused elegible assets.
So if there is a reestructuring of, let's say 50% of the total Ptguese, Greek and Irish debt and a increase of the defaults (not seen yet happening in the mortgage sector) to double (numbers happening in Spain and Ireland at the moment), all equity can be wiped out easily.
By the way, these are the links provided by the regulator:
ReplyDeleteBanco Comercial Português (BCP):
http://web3.cmvm.pt/sdi2004/emitentes/docs/FR33311.pdf
Banco BPI (BPI):
http://web3.cmvm.pt/sdi2004/emitentes/docs/FR33339.pdf
Banco Espírito Santo (BES):
http://web3.cmvm.pt/sdi2004/emitentes/docs/FR33482.pdf
All in English, of course.
gente que só dá boas notícias
ReplyDelete