Morgan Stanley said European banks may need 80 billion euros, $116 billion, by the end of the year in terms of raising capital to address sovereign issues. What people want in Europe is to have a large sovereign debt market that has the same safety and liquidity characteristics as the U.S. treasury market. The challenge is presented by each of the individual countries issuing separately.
There are event risks around the individual country. How do we get from where we are now to a more integrated euro bond market? We need to have the focused way toward fiscal integration. Gold should be more liquidity and more safety in the sovereign debt market across Europe.
At the end of June, it’s record that the exposure of Barclays to Portugal, Italy, Ireland, Greece and Spain is at 11.61 billion pounds. Bob Diamonds said he’s comfortable with exposure to Europe – essentially Barclays banking, retail and mortgage business. Looking at the situation in Greece, Bob said Barclays has virtually no exposure, and no exposure to banking sector in Italy. What Barclays has is the big retail and business bank in Spain and Italy. The vast majority of exposure is around the retail business. Hedges on deposits include loan exposure and it is in the 50 to 60% area, and he’s comfortable with that too. When people think of it as sovereign risk and worry, Barclays is the seventh largest bank in Spain and has quite a large retail business in Italy as well.
Banks in the U.S. and banks in the UK have raised capital. If you compare Barclays today to pre-crisis, mid-2007 or end of 2007, the core equity is at 11% – it was at 5.7% then. The level of leverage is at 20 times, mid-30s. The business carries liquidity, cash on the balance sheet of 140 to 150 billion pounds everyday. It was 25-50 billion pounds pre-crisis. The big banks in the UK and U.S. are much safer and much sounder than they were before this crisis began.
It's correct to be concerned about the U.S. economy; it has probably been slower in the first half than most people expected. At the second half of the year, good news, we have interest rates lower than expected. Oil prices are down by 10% and there is a faster recovery after the earthquake and tsunami in Japan. We are looking at 2 to 2.5% growth in the second half in the U.S. Some people are getting a little overly bearish. On the other hand, we would not be happy with 2-2.5% growth going forward particularly with growth rates in some of the emerging economies.
Looking at the challenges that the US faces, it has an economic growth rate, but since the recovery slower than people expected and economic growth rate is a little behind the emerging economy that makes people pessimistic. It also has a debt level that is higher than we would like. the us had income of 2.9 trillion and expenses of 3.9 trillion, a trillion dollar deficit for 3 years in a row.
The US need to reduce public spending, reduce deficit. We need the certainty around banks capital, bank regulation and corporate tax. US Corporate tax is second highest only after Japan. US can bring the nominal tax rate to 15-20% by eliminate the special interest exemption. It’s about the job growth.
The link for Bob Diamond interview can be view below:Bob Diamond one-on-one
There are event risks around the individual country. How do we get from where we are now to a more integrated euro bond market? We need to have the focused way toward fiscal integration. Gold should be more liquidity and more safety in the sovereign debt market across Europe.
At the end of June, it’s record that the exposure of Barclays to Portugal, Italy, Ireland, Greece and Spain is at 11.61 billion pounds. Bob Diamonds said he’s comfortable with exposure to Europe – essentially Barclays banking, retail and mortgage business. Looking at the situation in Greece, Bob said Barclays has virtually no exposure, and no exposure to banking sector in Italy. What Barclays has is the big retail and business bank in Spain and Italy. The vast majority of exposure is around the retail business. Hedges on deposits include loan exposure and it is in the 50 to 60% area, and he’s comfortable with that too. When people think of it as sovereign risk and worry, Barclays is the seventh largest bank in Spain and has quite a large retail business in Italy as well.
Banks in the U.S. and banks in the UK have raised capital. If you compare Barclays today to pre-crisis, mid-2007 or end of 2007, the core equity is at 11% – it was at 5.7% then. The level of leverage is at 20 times, mid-30s. The business carries liquidity, cash on the balance sheet of 140 to 150 billion pounds everyday. It was 25-50 billion pounds pre-crisis. The big banks in the UK and U.S. are much safer and much sounder than they were before this crisis began.
It's correct to be concerned about the U.S. economy; it has probably been slower in the first half than most people expected. At the second half of the year, good news, we have interest rates lower than expected. Oil prices are down by 10% and there is a faster recovery after the earthquake and tsunami in Japan. We are looking at 2 to 2.5% growth in the second half in the U.S. Some people are getting a little overly bearish. On the other hand, we would not be happy with 2-2.5% growth going forward particularly with growth rates in some of the emerging economies.
Looking at the challenges that the US faces, it has an economic growth rate, but since the recovery slower than people expected and economic growth rate is a little behind the emerging economy that makes people pessimistic. It also has a debt level that is higher than we would like. the us had income of 2.9 trillion and expenses of 3.9 trillion, a trillion dollar deficit for 3 years in a row.
The US need to reduce public spending, reduce deficit. We need the certainty around banks capital, bank regulation and corporate tax. US Corporate tax is second highest only after Japan. US can bring the nominal tax rate to 15-20% by eliminate the special interest exemption. It’s about the job growth.
The link for Bob Diamond interview can be view below:Bob Diamond one-on-one
