FXstreet.com (Barcelona) - As many other banks, Nomura believes that the Greek elections were nothing more than a distraction. The bank notes that “the solvency risk in Spain and its banking sector is likely to dominate markets as the smoke on the Greek elections clear. Just this morning, some monetary data releases provided a fresh insight into the problems in the Spanish banking sector: in April NPLs rose to 8.72% of total loans, up from 8.37% in March; in April, Spanish bank deposits dropped 2.52% month—on the month.”
Nomura warns that “Spain and its banks are still beholden to the rating agencies with regards to index investors, but more immediately acute is the additional collateral calls that could be forthcoming if rating agency DBRS were to downgrade... a downgrade by this agency could lead to an additional 5% collateral call on Spanish sovereign debt used in ECB operations.” The Japanese bank believes that Italy could be the next country in the crosshairs if the situation deteriorates further.
Nomura warns that “Spain and its banks are still beholden to the rating agencies with regards to index investors, but more immediately acute is the additional collateral calls that could be forthcoming if rating agency DBRS were to downgrade... a downgrade by this agency could lead to an additional 5% collateral call on Spanish sovereign debt used in ECB operations.” The Japanese bank believes that Italy could be the next country in the crosshairs if the situation deteriorates further.
