Posts Tagged ‘Interest’
Posted by hkarner - 10. Juli 2015
Source: The Economist
Banks once dreaded rate rises. Are they right to look forward to them now?
TEXTBOOKS say that banks make money by raising deposits relatively cheaply from savers and lending them, at a higher rate, to borrowers. The difference between the two rates is known in the trade as the “net interest margin” (NIM), and its size is an important factor in banks’ profits. But as the financial crisis prompted central banks around the world to lower interest rates almost to zero (and below, in a few cases), banks have been in a quandary. They cannot lower deposit rates enough to be able to lend at a decent margin, since most assume that depositors will not tolerate negative rates. Instead, they have watched the NIM shrink (see chart), and tried to recoup some of the lost profits by raising fees.
America’s 5,600 banks have therefore eagerly been awaiting the turn in the interest-rate cycle, in the hope that higher rates will bring a wider NIM and thus fatter profits. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Banken, Economist, Fed, Interest, NIM, Yellen | Leave a Comment »
Posted by hkarner - 8. Juli 2015
Paul De Grauwe 03 July 2015, voxeu
Greece’s debt is 180% of GDP, which seems to make it insolvent without large primary surpluses. This column argues that since restructuring lowered the interest burden to just 2% of GDP, Greece is solvent – or would be with nominal GDP growth of just 2%. The ECB’s misdiagnosis has caused an unnecessary banking crisis. The solution is to accept that Greek debt is sustainable, so the austerity programme can be relaxed and liquidity support provided to the Greek banking sector.
The issue of restructuring of the Greek debt is at the centre of the negotiations about how to resolve the Greek crisis. Since the start of that crisis the Greek sovereign debt has been subjected to several restructuring efforts.
- First, there was an explicit restructuring in 2012 forcing private holders of the debt to accept deep haircuts.
This explicit restructuring had the effect of lowering the Greek sovereign debt by approximately 30% of GDP.
- Second, there were a series of implicit restructurings involving both a lengthening of the maturities and a lowering of the effective interest burden on the Greek sovereign debt.
As a result of these implicit restructurings, the average maturity of the Greek sovereign debt is now approximately 16 years, which is considerably longer than the maturities of the government bonds of the other Eurozone countries. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: De Grauwe, Debt, Euro, Finanzkrise, Greece, Interest, Liquidity, Solvency, voxeu | Leave a Comment »
Posted by hkarner - 6. Juli 2015
Authors: Andris Strazds & Thomas Grennes · July 6th, 2015 · RGE EconoMonitor
The dust has yet to settle after the referendum in Greece and making any longer term predictions is next to impossible, other than stating the obvious that the next days and weeks will bring capital controls and issuing of IOUs to meet public sector payments, similar in form to the ones that the State of California issued in 2009. We would, however, like to share with our readers a few thoughts on what happened and what is key for Greece to get back on its feet.
Why the “no” vote?
Some observers and analysts are apparently surprised that the “no” vote came largely from the young Greeks while the older generation (those aged 55+) voted in favor of accepting the creditors’ proposal (www.keeptalkinggreece.com). This is, however, less of an enigma, if you consider it from the inter-generation contract perspective, a concept put forward by the historian Niall Ferguson. Greece is an extreme example of a broken intergenerational contract where the older ones have benefited greatly at the expense of destroyed prospects for the young generation. To give just some examples, pensions in Greece have been among the most generous in the EU while youth unemployment is now at 50%. Thus, even given an agreement with the creditors, the young generation in Greece would inherit a pile of debt while an improvement in the economic conditions and job prospects is nowhere near guaranteed. Looking from this perspective, a “no” from the young is understandable. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Competitiveness, Current Account Deficit, Debt, Euro, Ferguson, Finanzkrise, Greece, Grennes, Interest, RGE Monitor, Strazds | Leave a Comment »
Posted by hkarner - 5. Juni 2015
Oberndorfer: Nach Laufzeitverlängerungen bei Zinsanstieg wenig Stress
Wien – Was für Sparer bitter ist, ist zumindest für den Staatshaushalt ein Vorteil: Die Niedrigzinspolitik der Europäischen Zentralbank (EZB) nach den Finanzkrisen hat dem Bund von 2008 bis Juni 2015 mehr als 6 Milliarden Euro erspart, wenn man die Zinsen mit den Voranschlägen vergleicht. Der Bund kann, so die Bundesfinanzierungsagentur, auch von weiteren Reduktionen der Zinslast ausgehen.
Weil Österreich in der Tiefzinsphase die Laufzeiten im Staatsanleiheportfolio verlängert habe, “kann für das Budget selbst bei gestiegener Staatsschuld wenig Stress aus steigenden Zinsen entstehen”, sagte Martha Oberndorfer, die kommenden Montag nach siebeneinhalb Jahren an der Spitze der Oesterreichischen Bundesfinanzierungsagentur (OeBFA) an die Spitze der Staatsholding ÖBIB (ehemals ÖIAG) wechselt.
Der Großteil des Schuldenportfolios von 200 Mrd. Euro sei zum Festsatz verzinst. Wenn die Zinsen steigen, schlage sich dies nur auf jenen Teil durch, der neu finanziert werden müsse. Das seien im Schnitt 15 bis 20 Milliarden Euro im Jahr. Oberndorfer sieht die Zinskosten damit relativ gut abgefedert. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Austria, ÖBFA, Interest, Oberndorfer, Standard | Leave a Comment »
Posted by hkarner - 1. Juni 2015
01.06.2015 | 18:00 | (Die Presse)
Nun ist auch dieses Tabu gebrochen: Für Neukunden gibt es bei der heimischen Unicredit-Tochter keine Zinsgutschriften mehr. Dafür sinken die Überziehungszinsen.
Wien. An niedrige Zinsen haben sich die Österreicher bereits gewöhnt. Doch das ist auch für sie neu: Die Bank Austria streicht ihren Guthabenzins für Girokonten zusammen. Einlagen werden künftig gar nicht mehr verzinst. Die Änderungen betreffen ausschließlich Neukunden, die Regelung trat mit gestrigem Montag in Kraft.
Bestandskunden können indes „aufatmen“, weil die Zinsen auf ihren Konten nach wie vor bei 0,125 Prozent liegen. Reich wird man damit allerdings nicht. Wer ein Jahr lang im Schnitt 1000 Euro auf seinem Konto parkt, erhält eine Zinsgutschrift von rund einem Euro. Von diesem Betrag wird die Kapitalertragssteuer in der Höhe von 25 Prozent abgezogen. Für Neukunden fällt diese nicht mehr an, da das Institut keine Zinsgewinne ausbezahlt. Die Bank Austria hat in Österreich mehr als eine Million Girokonten. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Austria, Bank Austria, Banken, Interest, Presse | Leave a Comment »
Posted by hkarner - 4. Mai 2015
The world’s most admired billionaire faced tough questions at Berkshire Hathaway’s annual meeting.
Warren Buffett, the world’s most admired billionaire, faced a lot of criticism on his home turf at this year’s annual meeting of Berkshire Hathaway. Some of it was self-inflicted.
Buffett said that he wouldn’t have predicted that interest rates could have stayed this low for this long without a problem. “So far, I have been wrong on interest rates,” said Buffett. “It is so hard for me to believe that you can drop money from a helicopter and not have inflation, but we haven’t.”
Two years ago, the Berkshire CEO said he was worried about the Federal Reserve’s efforts to stimulate the economy. In particular, Buffett warned that the end of the Fed’s so-called quantitative easing program, in which the U.S. central bank bought billions in bonds to drive down interest rates, would end badly. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Buffett, Fed, Fortune, Interest | Leave a Comment »
Posted by hkarner - 14. April 2015
Source: The Wall Street Journal
Subzero rates have put some lenders in an inconceivable position: paying interest to those who have borrowed money from them
Tumbling interest rates in Europe have put some banks in an inconceivable position: owing money on loans to borrowers.
At least one Spanish bank, Bankinter SA, the country’s seventh-largest lender by market value, has been paying some customers interest on mortgages by deducting that amount from the principal the borrower owes.
The problem is just one of many challenges caused by interest rates falling below zero, known as a negative interest rate. All over Europe, banks are being compelled to rebuild computer programs, update legal documents and redo spreadsheets to account for negative rates. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Banken, Euribor, Euro, Interest, Spain, WSJ | Leave a Comment »
Posted by hkarner - 21. März 2015
Source: The Wall Street Journal
Gyrations show return of volatility to financial markets and raise worries on liquidity
The dollar quickly rebounded Thursday from its worst decline against the euro in six years, capping two days of wild gyrations that marked the return of heightened volatility to currency markets that had been placid for years and raising worries that crucial corners of the financial system, such as bonds, could seize up.
The market’s agitation reflected a sudden unexpected uncertainty about the path of interest rates in the U.S. and the rest of the world. For months investors have piled into bets that the dollar will rise against the euro, Japanese yen and many emerging-market currencies, anticipating the greenback will benefit from the gathering strength of the U.S. economy and efforts world-wide by other central banks to bolster domestic economic growth by reducing interest rates and otherwise easing policy.
But investors were briefly unnerved on Wednesday when the Federal Reserve’s policy statement made clear that officials aren’t set on a short-term interest-rate increase in June, as many had assumed. A number of trading firms struggled to exit from positions that benefit from a rising dollar, adding to anxiety and fueling further price swings. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Bonds, currency, Interest, USA, Volatility, WSJ | Leave a Comment »
Posted by hkarner - 2. März 2015
Source: Project Syndicate
Nouriel Roubini, a professor at NYU’s Stern School of Business and Chairman of Roubini Global Economics, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.
NEW YORK – Monetary policy has become increasingly unconventional in the last six years, with central banks implementing zero-interest-rate policies, quantitative easing, credit easing, forward guidance, and unlimited exchange-rate intervention. But now we have come to the most unconventional policy tool of them all: negative nominal interest rates. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Growth, Interest, Roubini | Leave a Comment »
Posted by hkarner - 24. Januar 2015
Source: The Economist: Buttonwood
Why investors would opt to lose money
A GUARANTEED loss. That is what investing in bonds at negative yields implies: those who buy the bonds will get back less than they paid even after interest is taken into account (and some will have to pay tax on the income as well). Yet government bonds of various maturities in as many as ten countries are selling at negative yields. Why on earth would bond investors, the “masters of the universe” once famed for intimidating governments, be willing to accept such a lousy deal?
One obvious reason is fear, or at least caution. In the depths of the financial crisis in 2008, when the safety of the banks seemed in doubt, short-term Treasury bills offered negative yields and investors were happy to take them. (Holding physical cash is impractical, given the sums involved.) Now, with some uncertainty about what might happen to banks were Greece to leave the euro, investors may decide it is worth accepting a negative yield of 0.16% on two-year German bonds. “In effect you’re paying a 16-basis-point custody fee for keeping your money safe,” says David Lloyd of M&G, a fund-management group. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: bond yields, Bonds, Economist, Interest | Leave a Comment »