(WSJ) Europe’s Smart Money Votes With Its Feet

Posted by Kendall Harmon

Euro-zone leaders say they are determined to save the single currency. But the smart money is voting with its feet. First, short-term U.S. dollar-funding markets effectively closed, then the senior unsecured-bond markets shut down, then the interbank market. Now, corporate customers appear to be withdrawing their deposits from some countries' banks. With an estimated €1.7 trillion ($2.29 trillion) of funding to roll over in the next three years, the stresses in the euro-zone banking system look doomed to get worse.

In some cases, the drop in corporate deposits has been startling. In Italy, nonretail customers withdrew €56 billion in the three months to the end of September, a fall of 12%. Intesa Sanpaolo and UniCredit saw corporate deposits decline by 16% and 10%, respectively, according to Citigroup research. Similarly, in Spain, nonretail deposits fell by 20% in the third quarter, with Santander and BBVA losing 10% and 11%, respectively. Even the French banks weren't immune: Société Générale and BNP Paribas saw their corporate-deposit balances fall by 7% and 6%, respectively.

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Filed under: * Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

Posted November 23, 2011 at 4:59 am

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The URL for this article is http://www.kendallharmon.net/t19/index.php/t19/article/39818/

1. Ad Orientem wrote:

What we are seeing is the early stages of a run on the banks.  These sorts of things can turn into a panic very quickly.  In the US we had a government in 2008-09 that was able to intervene decisively to stop a financial meltdown.  Does Europe?

I doubt it.

November 23, 9:01 pm | [comment link]

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