2012年6月15日星期五

Hidden in the back of Wall Street "European Venture

Earlier this year, the number of U.S. banks said publicly that they have significantly cut the risk exposure on the economies of most of the problems in Europe. When Europe's debt crisis seems to be heating up again, this is gratifying news. But it is ignored, when Wall Street banks to cut exposure in Greece, Ireland and Portugal, the increase in loans and bond purchases, Italy, France and other euro area countries, which appears to be more secure, such as prudent risk investment.

Last weekend, the euro-zone countries are forced to reach out to the Spanish banking sector, which increases the market for the euro area larger economies might be higher than the previous estimate more of default risk fears. But may cause problems to the U.S. banking industry.

For example, Goldman Sachs Group (Goldman Sachs) in the first quarter of this year purchased a $ 2.2 billion worth of Italian bonds, the country is widely regarded as another caught in trouble big country (after Spain). Bank of America (Bank of America) in the first quarter of this year, the same increase in the investment portfolio of $ 600 million worth of Italian government bonds. Morgan Stanley (Morgan Stanley) a year ago, a substantial bet on French government bonds, and holdings of $ 555 million worth of French government bonds.

The only visible figure, the investment bank disclosed the previous more positions betting on the euro-zone countries who are caught in the past year to the debt problems of countries such as Greece, Ireland and Portugal. Goldman Sachs, Bank of America and JP Morgan (JP Morgen) still did not disclose the details of borrowing and credit exposure of banks to give France. A large U.S. investment banks to disclose any they can afford the loss of Germany or the euro area as a whole.

It seems that Wall Street investment banks and large U.S. banks recent increase in betting on Europe's largest economy, the U.S. banking sector needs more capital to meet new regulatory requirements, they do not need to sell more shares, the only other option is to enhance the bottom line . However, the slowdown in U.S. economic growth, is still struggling to fight the housing market downturn, as well as very low interest rate environment is difficult to achieve. Therefore, a series of U.S. banks to line of sight on Europe, while local banks are struggling to expand and enhance the business. Goldman Sachs Group Inc. President Gary Cohn, Goldman Sachs may attract customers by weaker overseas competitors, and the country would benefit from the financial crisis in a recent report made ​​to investors and analysts. Even so, Goldman Sachs will have to bear the risk may be the loss of Europe.

So, the big investment bank in Europe in the end how much risk? Wall Street seems ambiguous on this issue. Europe's debt problem seems to be at the expense of its business, such as the European M & A, in addition to the consultancy fees charged by the U.S. banking industry from the transaction hit a record low. Compared to the number of mortgage-backed securities rely on the U.S. real estate and the U.S. banking industry, the size of Europe's position seems to be much smaller. As long as they hedge works, which is a major assumption in view of the risk exposure in Europe, it seems that any Bank of America are less likely to go bankrupt or closed. Kansas City financial stress index used to measure the size of the U.S. banking system risk was recorded in May -11. The index is less than zero means that the number of any large U.S. banks, the risk of difficulties than usual lower.

But this does not mean that everyone is nothing to worry about. Senior bank analyst Tom Brown said recently that the head of a large bank in the country told him that "scared to death". The supervisor greatest fear is that the other hand, that is, if the breach of contract in Europe, its hedging strategy may fail.

Bank analyst Christopher Whalen, said that many people seek the currency risk. Goldman's Cohn said that Goldman Sachs has spent a lot of time to search for its trading partners the possibility of ultimately de la Mark, Greece or other re-emergence of the currency to repay the funds. Whalen said, when big banks backing, he does not particularly worry about European issues, although he has said he was not sure. He said: "Wall Street's new game is to guess what the risks in Europe? And find it."

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