" Every hundred years we must nationalize the banks. " Remained muted Alan Greenspan, former Fed chairman, reveals his recipe for fighting the crisis.
From the U.S. nationalization of the hypothesis is attracting more and more supporters and appears closer. The flag of Obama may soon fly on Citigroup and Bank of America.
The hypothesis of nationalization would not be painless for the market. In a study UBS tries to trace the consequences of such an operation.
Analysts of Swiss bank business institutions fall into three categories analyzed. Those with a Core Tier 1 (index measuring the soundness of banks) over 8% should have no need of State support. Banks with a Core Tier 1 between the 4 and 8% that will have to resort to various government programs: issuance of bonds, state guarantees, accepting even stricter rules. Finally, the list drawn up by UBS institutions are located with a Core Tier 1 under 4%: for them the only solution is nationalization.
The reason is very simple: the collapse of markets and the economic crisis could lead to major write-downs and banks with a Tier 1 low risk of losses greater than its assets. Until now, says the report, the abolition of the accounting standard IAS 29 has led to not devalue the portfolio holdings by limiting the damage. The continued decline of the markets, however, now in danger of limiting the beneficial effects. The nationalization would be the only solution. "But not always - the analysts add - good solutions for the system are also shareholders."
1998 The case of Japan shows. Even then, the crisis was marked by a sharp credit crunch, by the bursting of a housing bubble and deflation lasted for years with rates at historic lows. The government, to save the financial system, was forced to nationalize the two banks in crisis, CPTA and NCB. The rules of the process were clear: zero total value of the shares which by law passed under state control, devaluation of 25% of the titles of privilege, refund bond.
That is the real reason why, since in America and in Europe has come to talk of nationalization, the banks have collapsed. Shareholders fear that the state expropriations at ridiculous prices of their securities. And UBS warned that if the United States to proceed with the nationalization of the zero value of the shares, the day after banks in Europe would be overwhelmed by sales. The Board, therefore, is to act in a coordinated manner between different countries, but quickly, otherwise more see the action more markets will suffer the uncertainty of the intervention.
Analysts of Swiss bank drew up a list of titles Europe will have nothing to fear, including: Oxford Dictionary, HSBC, Scotiabank and TD Bank Itau unlikely any nationalization. The other Italian banks are not cited by UBS, but all have a Core Tier 1 over 4%.
morning even Prime Minister Silvio Berlusconi has made it clear that "the nationalization of banks in Italy is in no conceivable way that the banking system is very solid, we are a nation of savers and banks do not have the adventure course the toxic assets. "
The Prime Minister added that the government has made available 10 billion to 12 billion "to increase the capital base of banks," but "at present no Italian bank has felt necessitated to use such sums."
