ECB Says Euro-Region Banks May Lose a Further $283 Billion

ECB Says Euro-Region Banks May Lose a Further $283 Billion

June 15 (Bloomberg) -- Commercial banks in the 16-nation euro region may lose a further $283 billion by the end of next year as the financial crisis forces them to write off bad loans, the European Central Bank said.

“Hard-to-value assets have remained on bank balance sheets and the marked deterioration in the economic outlook has created concerns about the potential for sizeable loan losses,” the Frankfurt-based ECB said in its June Financial Stability Report today. ECB staff estimates suggest the total amount of potential write-downs over the period 2007 to 2010 “could amount to around $649 billion.” Some $365 billion have already been reported, it said.

Deutsche Bank AG, Germany’s biggest bank, has booked about $14.9 billion in writedowns and credit losses since the U.S. subprime-mortgage crisis began in the middle of 2007, less than $2 billion of which were related to subprime loans. Worldwide losses tied to distressed loans and securitized assets may reach $4.1 trillion by the end of 2010 amid the worst global recession since World War II, the International Monetary Fund said on April 21.

“There is no room for complacency because the risks for financial stability remain high, also bearing in mind that the credit cycle has not yet reached a trough,” ECB Vice President Lucas Papademos said at a press briefing in Frankfurt today. “Policy makers and market participants will have to be especially alert in the period ahead.”

The ECB expects the euro-region economy to contract by around 4.6 percent this year and 0.3 percent in 2010. Inflation is expected to average just 0.3 percent this year, the bank’s latest projections show.

“Banks should be encouraged to take advantage of the governments’ commitments for support and strengthen their capital buffers,” Papademos said. Still, because buffers have been maintained well above the minimum regulatory requirements, euro-area banks “appear to be sufficiently well capitalized to withstand severe but plausible downside scenarios,” he said. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=a9OppHNsK.I4

IMF says worst not over

IMF says worst not over

LONDON (Reuters) - The head of the IMF questioned on Monday any debate about when to roll back stimulus spending, saying the world economy had yet to weather the worst of a recession that claimed a record number of European jobs.

The 16-country euro zone lost a record 1.22 million jobs in the first quarter, official data showed. Employment during the first quarter fell 1.2 percent year-on-year, the deepest annual drop since measurements started in 1995.

Even if some form of economic recovery is not far off, analysts say unemployment will climb for many months to come.

Underlining the fragile state of the global economy, an influential economist said China would not see a rapid rebound and South Korea's finance minister said its economy was still sliding, although the pace had slowed.

But in southern Italy, Group of Eight finance ministers meeting at the weekend described their economies in the most positive terms since the collapse of U.S. bank Lehman Brothers nine months ago heightened the world's worst financial crisis since the Great Depression of the 1930s.

"Their (G8) stance is that we are beginning to see some green shoots but nevertheless we have to be cautious," International Monetary Fund chief Dominique Strauss-Kahn said during a visit to Kazakhstan. "The large part of the worst is not yet behind us."

Pressure has been building in the G8, particularly from fiscally conservative nations such as Germany and Canada, for plans to wind down stimulus as soon as it is no longer needed. Read Article... http://www.reuters.com/article/newsOne/idUSTRE55E0BJ20090615

European stocks fall after grim industrial data

European stocks fall after grim industrial data
European markets fall after grim industrial data, ahead of expected subdued US open

http://finance.yahoo.com/news/European-stocks-fall-after-apf-15509211.html?sec=topStories&pos=3&asset=&ccode=

Germany's DAX fell 23.89 points, or 0.5 percent, to 5,083.37 and the CAC-40 in France was 2.65 points, or 0.1 percent, lower at 3,332.29.

The European Union's statistics office Eurostat revealed that industrial production in the 16 countries that use the euro slumped by 1.9 percent in April from the previous month. That was way more than the 1 percent decline expected in the markets and stoked worries that the recession in the euro zone may not yet have bottomed out, as some had hoped.

"April's euro-zone industrial production figures provide few signs that the negative effects from destocking and the collapse in global trade are waning," said Ben May, European economist at Capital Economics.

Industrial production plays a particularly important role in the European economy and its recovery, whenever it comes, will provide a clear indication that the worst of the recession is over.

Sharply lower industrial output was blamed for the massive 2.5 percent quarterly fall in the euro zone's first quarter gross domestic product. The recession in Germany, the euro zone's biggest economy, was even greater as demand for its high-value exports, such as cars and heavy machinery, slumped amid the collapse in global trade.

Meanwhile, the FTSE 100 index of leading British shares was down 12.57 points, or 0.3 percent, at 4,449.30 with Barclays PLC down around 3 percent after it confirmed the sale of its global investment unit to U.S. fund manager BlackRock Inc. for $13.5 billion.

Duitsland neemt maatregelen om de economie te stimuleren

Duitsland neemt maatregelen om de economie te stimuleren
De Duitse regering is bezig met de voorbereiding van een 50 miljard Euro plan om de economie te stimuleren.
Vorige maand werd de prognose voor de groei van de Duitse economie (2.6 biljoen Euro) in 2009 naar beneden bijgesteld naar 0.2 procent, vergeleken met 1.7 procent voor dit jaar.

Germany Plans Stimulus Program to Boost Economy (Update1)