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Rights issues: European banks go it alone

BNP Paribas leads the way on state repayment; Are other banks looking to do too much, too soon?

  Baudouin Prot, BNP Paribas

"State intervention to provide equity and liquidity has fully achieved its objectives. Given the changing environment and strong performance of BNP Paribas, this support is no longer required"

Baudouin Prot, BNP Paribas

The IMF’s Global Financial Stability report, published during its annual meetings in Istanbul in October, states that European banks have been slower to take their lumps in this crisis than the US banks which, in aggregate, have already recognized 60% of their cumulative losses. According to the IMF, the Europeans have recognized only 40% of theirs. The European banks have also been slower than their US peers to pay back state aid. Many US banks quickly moved to do this after favourable results from regulators’ stress tests in April immediately allowed them to raise equity from private investors once more.

Of course, US regulators and banks shared a desire to see private capital replace government capital. One source tells Euromoney that his bank’s chief executive intervened personally with US regulators and prevailed on them to share their stress test findings in advance with selected wall-crossed investors, so that early bank equity capital-raisings could proceed quickly and successfully.

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