{"id":22440,"date":"2017-01-11T16:18:52","date_gmt":"2017-01-11T21:18:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22440"},"modified":"2017-01-11T16:18:52","modified_gmt":"2017-01-11T21:18:52","slug":"ubs-warns-spains-most-italian-bank-runs-out-of-options","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22440","title":{"rendered":"UBS Warns: Spain\u2019s \u201cMost Italian Bank\u201d Runs Out of Options"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2017\/01\/11\/ubs-warns-banco-popular-spains-most-italian-bank-out-of-options\/\">UBS Warns: Spain\u2019s \u201cMost Italian Bank\u201d Runs Out of Options<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>The bank-bailout business rages on.<\/strong><\/p>\n<p>During the first week of 2017, Spain\u2019s \u201cmost Italian bank\u201d, Banco Popular, got off to a flying start as its stock outperformed all other major Spanish banks. By Jan 5th its shares had even crossed the \u20ac1-line for the first time in nearly\u00a0a month.\u00a0But Popular\u2019s New Year fairy tale was not made to last.<\/p>\n<p>Its upward momentum, if that\u2019s the right term, was brought to a halt by a bombshell report from UBS that\u00a0<a href=\"http:\/\/www.vozpopuli.com\/economia-y-finanzas\/banca\/UBS-Banco-Popular-rentable-Bankia_0_988701725.html\">concludes<\/a>\u00a0that Popular\u2019s stock, which already lost three-quarters of its value last year and is down over 90% since 2008, is still overvalued by 20%. In less than an hour, Popular\u2019s shares were back under a euro. That\u2019s life in the penny-stock lane.<\/p>\n<p>According to the report, Popular has a provision deficit of \u20ac1.9 billion. In other words, it has nonperforming loans\u00a0and other toxic assets on its books whose losses would amount to \u20ac1.9 billion. But it has not yet booked (or \u201crecognized\u201d) those losses. If it did finally recognize those losses, it could end up with a \u20ac2.4 billion capital gap. That\u2019s the equivalent of roughly 60% of its current market cap.<\/p>\n<p>The UBS analysts acknowledged that their previous forecast of the bank\u2019s capacity to absorb loss provisions had been \u201ctoo optimistic\u201d, with the new estimates showing a lower coverage ratio (46% compared to the previous 50%) and capital ratio (10% instead of 10.8%).<\/p>\n<p class=\"mce\">UBS also poured cold water on the idea of Banco Popular further expanding its bad-debt provisions, since doing so would \u201cpermanently depress\u201d its profitability, limiting its capacity to create new capital and increasing its regulatory risk. This is bad news for a bank that continues to drown in its own toxic soup eight years after the burst of Spain\u2019s mind-boggling real estate bubble.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>UBS Warns: Spain\u2019s \u201cMost Italian Bank\u201d Runs Out of Options The bank-bailout business rages on. During the first week of 2017, Spain\u2019s \u201cmost Italian bank\u201d, Banco Popular, got off to a flying start as its stock outperformed all other major Spanish banks. By Jan 5th its shares had even crossed the \u20ac1-line for the first [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2015,13915,61,63,5660,1464,743,1029,4255],"class_list":["post-22440","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bailout","tag-banco-popular","tag-banking","tag-banks","tag-don-quijones","tag-italy","tag-spain","tag-ubs","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22440","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22440"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22440\/revisions"}],"predecessor-version":[{"id":22441,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22440\/revisions\/22441"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22440"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22440"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22440"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}